1) An alternative requires $60000 to be paid over the course of year 1, $75000 over year 2, and $40000 over year 3. All values are in constant dollars. Using the tables in the chapter, compute the NPV of this alternative. Round intermediate calculations to two decimal places.
| $163,886
| $169,136
| $144,644
| $150,203
|
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2) If an asset is provided in support of a particular alternative rather than being sold for its salvage value, the forgone earnings are considered:
| An incremental cost.
| An opportunity cost.
| A sunk cost.
| An externality cost.
|
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3) An alternative has a discounted project cost of $19,345,000 with a discounted salvage value of $1,750,000. The estimate was in constant dollars and the discounting used end-of-year factors. While the period of analysis is 5 years, the alternative only provides benefits for the last 4 years. Calculate the uniform annual cost.
| $4,810,137
| $3,798,083
| $5,193,023
| $5,896,471
|
|
4) All of the following are exceptions to the EA requirement except for:
| Environmental or hazardous waste reduction.
| Congressional mandate to pursue a specific alternative
| Consideration of an investment decision.
| The cost of performing the analysis outweighs the potential benefits.
|
|
5) If an alternative has an advance payment of $100,000 upon contract award and then quarterly payments of $20,000 for the next 3 years, what would the cash flow diagram look like? Select the correct choice from each pair of answers.
| $100,000 EOY 1
| $100,000 BOY 1
| $80,000 MOY 1
| $20,000 MOY 1
| $80,000 MOY 2
| $20,000 MOY 2
| $80,000 MOY 3
| $20,000 MOY 3
|
|
6) If a lease requires the payment of $150,000 a year from now, and the discount rate is 4%, what is the present value of the lease? Carry interim calculations to four decimal places and round your answer to the nearest dollar.
| $142,857
| $144,231
| $150,000
| $156,000 |
|
Solution: Defense BCF 106 - An alternative requires $60000