Harvard Extension School Operations And Supply Chain Management Assignment Help - The expansion

Question - 1. The expansion of the Wideplace Mall is delayed over the issue of parking. There is not enough now
to support the new facility and more must be added. Let's suppose that there are 3 options: buying
more land, filling wetlands at the rear of the site, or building a multilevel garage on the present lot.
Assume a forty-year planning horizon and an interest rate of 9% per year. Use present worth analysis
and the data below to determine which option should be selected.
Purchase Land Fill W etlands Garage
Initial Cost, $ $12,000,000 $19,000,000 $44,000,000
Annual Benefit,
$ per year 0 0 4,000,000
(parking fees)
Annual Cost,
$ per year 200,000 160,000 2,900,000
2. Your company needs a small front-end loader for handling bulk materia ...Read More ls at the Wideplace plant. It
can be leased from the dealer for three years for $4050 per year including all maintenance. It can also
be purchased for $14,000. You expect the loader to last for six years and to have a salvage value of
$3000. You predict that maintenance will cost $400 the first year and increase by $200 per year in
each year after the first. Your MARR is 15% per year. Use AW analysis to determine whether to lease
or buy the loader.
3. For the cash flow series below, calculate the composite rate of return, using a reinvestment rate of
14% per year.
Year Cash Flow, $
0 3000
1 -2000
2 1000
3 -6000
4 3800
4. The State Department of Excessive Spending (DES) is planning to build a new office building for
the Bureau of Eternal Taxation (BET) near Wideplace. Four proposed sites are to be evaluated. Any
of these sites will save the state $750,000 per year because the space for BET will no longer need to
be rented from the private sector. Use any proper analysis approach with a 6% per year interest rate
and assumes that the building and its benefits will last for 40 years. Which, if any, site should DES
choose?
Site Here Near Far Farther
Initial Cost $8,600,000 $8,100,000 $7,500,000 $6,800,000
Annual Operating Cost $160,000 $ 200,000 $240,000 $300,000


5.The following two alternatives are mutually exclusive. Which one will you select if your MARR is
15% per year? Use rate of return analysis.

Alternative Initial Cost Annual Benefit Life, years
Ordinary (O) $30,000 $9,000 5
Above average (AA) 33,000 9,000 6 ...Read Less

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