1.) JK Chemicals is investing on a new overseas chemical manufacturing plant. Several potential locations wereconsidered and surveys and researches of the areas yielded the following data. Which location should thecompany choose to build their new chemical plant?Estimated timeCost of LandAnnual Cost ofAnnual Cost ofto finish inEquipmentLaboryearsSite 1$750,000$500,000$300,0003Site 2$1,000,000$400,000$435,0004.3Site 3$980,000$453,000$346,0002.9Site 4$800,000$237,000$600,0002.2Site 5$670,000$344,000$342,0005.1Site 6$500,000$230,300$876,0001.5Site 7$600,000$543,000$223,0002.6Site 8$800,000$293,000$234,0003.4Site 9$880,000$300,000$324,0004.1Site 10$540,000$123,000$100,0008

Ans. Site 6 Total cost to build chemical Plant in Site 6 is $ 2159450

1.) JK Chemicals is investing on a new overseas chemical manufacturing plant. Several potential locations were considered and surveys and researches of the areas yielded the following data. Which location should the company choose to build their new chemical plant? Estimated time Annual Cost of Equipment Cost of Land Annual Cost of to finish in Labor years Site 1 $750,000 $500,000 $300,000 3 Site 2 $1,000,000 $400,000 $435,000 4.3 Site 3 $980,000 $453,000 $346,000 2.9 Site 4 $800,000 $237,000 $600,000 2.2 Site 5 $670,000 $344,000 $342,000 5.1 Site 6 $500,000 $230,300 $876,000 1.5 Site 7 $600,000 $543,000 $223,000 2.6 Site 8 $800,000 $293,000 $234,000 3.4 Site 9 $880,000 $300,000 $324,000 4.1 Site 10 $540,000 $123,000 $100,000 8

1.) JK Chemicals is investing on a new overseas chemical manufacturing plant. Several potential locations were considered and surveys and researches of the areas yielded the following data. Which location should the company choose to build their new chemical plant? Estimated time Annual Cost of Equipment Cost of Land Annual Cost of to finish in Labor years Site 1 $750,000 $500,000 $300,000 3 Site 2 $1,000,000 $400,000 $435,000 4.3 Site 3 $980,000 $453,000 $346,000 2.9 Site 4 $800,000 $237,000 $600,000 2.2 Site 5 $670,000 $344,000 $342,000 5.1 Site 6 $500,000 $230,300 $876,000 1.5 Site 7 $600,000 $543,000 $223,000 2.6 Site 8 $800,000 $293,000 $234,000 3.4 Site 9 $880,000 $300,000 $324,000 4.1 Site 10 $540,000 $123,000 $100,000 8

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter10: The Basics Of Capital Budgeting: Evaluating Cash Flows

Section: Chapter Questions

Problem 19P

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