ECOR 3800 : Private Transportation Company - Reducing the Carbon Footprint - Economics Assignment Help

Assignment Task :

Question 1 

The management of a private transportation company is interested in reducing the carbon footprint of their company by replacing several old trucks. These include four (4) Class 8 Volvos, thirteen (13) on-highway Volvo trucks, and twenty-seven (27) Freightliners. The company may either replace the ageing trucks with new ones of the same kind OR replace them with electric Semi  trucks from Tesla.  

The first alternative involves scrapping all old trucks and purchasing forty-four (44) new Volvo  and Freightliners models and planting 150,000 trees (to offset carbon usage).  

The second option involves scrapping all old trucks and purchasing thirty-one (31) Tesla models  along with related equipment. 

The management team believes that various investment opportunities available for the company will guarantee at least a rate of return on investment (MARR) of at least 9.5%. The marginal tax  rate is 21%. Due to uncertainty, some input variables may vary from the base cases presented in  the above table.

The following variabilities in estimates should be considered:

Assume that each of these variables can independently deviate from its base value.  

a] Assuming that the uncertain variables change once at a time, use NPW to conduct sensitivity  analysis. Ideally, you should plot the relationship between percentage change in a variable and  NPW. You can use an increment of 5% change in input variables when conducting sensitivity  analysis. You can consider a range of variation corresponding with the minimum and maximum  percentage changes given in the previous table. 

b] Now, consider that each variable can take only three possible outcomes within the range of  possible outcomes: lowest value, base value, and highest value. Each outcome can happen with a  probability: 0.10, 0.65, and 0.25, respectively.  

Considering the distributions of the three uncertain variables, predict the probability distribution  of NPW for each alternative. You may want to note that each NPW will have 27 possible  combinations of outcomes (3x3x3), and you are required to do that for each alternative.  

c] If Alternative 1 is chosen over Alternative 2, identify all possible scenarios in which  Alternative 1 is better than Alternative 2. What is probability that this decision correct? 

Question 2 

A work breakdown structure and expected durations for a project are as follows:

[a] Create the AON network. 

[b] Identify the CPM. 

[c] Prepare a crash schedule to shorten the completion time by 2 weeks.

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