ENCE 422

Project Cost Accounting and Economics

1



Homework #2 Solutions
(DUE 5pm September 23, 2010)

Textbook Problems (chapter 4 and chapter 5)
4-43, 4-53, 4-55
5-3, 5-6, 5-14, 5-21, 5-23

9. Four proposals (A, B, C, and D) are available for investment. Proposals A and C
cannot both be accepted; proposal B is contingent upon the acceptance of either
proposal C or D; and proposal A is contingent on D. List all possible combinations of
proposals and clearly show which are feasible.
10. Three proposals (P, Q, and R) are available for investment. Exactly one or two
proposals must be chosen; proposals P and Q are mutually exclusive. Proposal R is
contingent on proposal P being funded. List all feasible mutually exclusive
investment alternatives.
(Total points: 100)

Solutions:
ENC
Proj

CE 422
ject Cost Ac
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ccounting a
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and Econom
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mics
2
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ENC
Proj

CE 422
ject Cost Ac
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ccounting a
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and Econom
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mics
3
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ENC
Proj

CE 422
ject Cost Ac

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ccounting a
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and Econom
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mics
4
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ENC
Proj

CE 422
ject Cost Ac

9. Four pro
cannot both
proposal C
proposals a


10. Three p
proposals m
contingent
investment
ccounting a
posals (A, B
h be accepte
or D; and p
and clearly s
Alternat
ALT 1
ALT 2
ALT 3
ALT 4
ALT 5
ALT 6
ALT 7
ALT 8
ALT 9
ALT 10
ALT 11
ALT 12
ALT 13
ALT 14
ALT 15
ALT 16

Feasible
{ },{C},
proposals (P
must be cho
on proposal
alternatives
and Econom
B, C, and D
ed; proposal
proposal A i
show which
ive
A
0
1
0
0
0
1
1
1
0
0
0
1
1
1
0
1

e mutually
{D},{A,D},{B
P, Q, and R)
sen; propos
l P being fu
s.
mics
5
D) are availa
l B is contin
is contingen
h are feasibl
Proposal
B C
0 0
0 0
1 0
0 1
0 0
1 0
0 1
0 0
1 1
1 0
0 1
1 1
1 0
0 1
1 1
1 1

exclusive
B,C},{B,D},{C
) are availab
sals P and Q
unded. List a
able for inve
ngent upon
nt on D. Lis
le.
l
D
0
0
0
0
1
0
0
1
0
1
1
0
1
1
1
1

alternativ
C,D},{A,B,D},{
ble for inves
Q are mutual
all feasible
estment. Pro
the accepta
st all possibl
Comments
ok
X
X
ok
ok
X
X
ok
ok
ok
ok
X
ok
X
ok
X

ves
{B,C,D}
stment. Exa
lly exclusiv
mutually ex

oposals A an
ance of eithe
le combinat
actly one or
ve. Proposal
xclusive

nd C
er
tions of
two
l R is
ENCE 422
Project Cost Accounting and Economics
6


Alternative Proposal Comments
P Q R
ALT 1 0 0 0 X
ALT 2 1 0 0 ok
ALT 3 0 1 0 ok
ALT 4 0 0 1 X
ALT 5 1 1 0 X
ALT 6 1 0 1 ok
ALT 7 0 1 1 X
ALT 8 1 1 1 X

Feasible mutually exclusive alternatives
{P},{Q},{P,R}