A new furnace for your small factory will cost $47,000 and a year to install, will require ongoing maintenance expenditures of $1,500 a year. But it is far more fuel-efficient than your old furnace and will reduce your consumption of heating oil by 4,400 gallons per year. Heating oil this year will cost $2 a gallon; the price per gallon is expected to increase by $0.50 a year for the next 3 years and then to stabilize for the foreseeable future. The furnace will last for 20 years, at which point it will need to be replaced and will have no salvage value. The discount rate is 8%. a. What is the net present value of the investment in the furnace? (Do not round intermediate calculations. Round your answer to the nearest whole dollar.) b. What is the IRR? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) c. What is the payback period? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
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- A new furnace for your small factory will cost $31,000 and a year to install, will require ongoing maintenance expenditures of $4,600 a year. But it is far more fuel-efficient than your old furnace and will reduce your consumption of heating oil by 2,800 gallons per year. Heating oil this year will cost $4 a gallon; the price per gallon is expected to increase by $0.50 a year for the next 3 years and then to stabilize for the foreseeable future. The furnace will last for 20 years, at which point it will need to be replaced and will have no salvage value. The discount rate is 8%. a. What is the net present value of the investment in the furnace? (Do not round intermediate calculations. Round your answer to the nearest whole dollar.) b. What is the IRR? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) c. What is the payback period? (Do not round intermediate calculations. Round your answer to 2 decimal places.) d. What is the…A new furnace for your small factory is being installed right now, will cost $39,000, and will be completed in one year. At that point, it will require ongoing maintenance expenditures of $1,100 a year. But it is far more fuel-efficient than your old furnace and will reduce your consumption of heating oil by 3,600 gallons per year. Heating oil this year costs $2 a gallon; the price per gallon is expected to increase by $0.50 a year for the next 3 years and then to stabilize for the foreseeable future. The furnace will last for 20 years from initial use, at which point it will need to be replaced and will have no salvage value. (Specifically, the firm pays for the furnace at time 0, and then reaps higher net cash flows from that investment at the end of years 1 – 20.). The discount rate is 10%. a. What is the net present value of the investment in the furnace? (Do not round intermediate calculations. Round your answer to the nearest whole dollar.) b. What is the IRR? (Do not round…A new furnace for your small factory is being installed right now, will cost $27,000, and will be completed in one year. At that point, it will require ongoing maintenance expenditures of $1,500 a year. But it is far more fuel-efficient than your old furnace and will reduce your consumption of heating oil by 2,400 gallons per year. Heating oil this year costs $3 a gallon; the price per gallon is expected to increase by $0.50 a year for the next 3 years and then to stabilize for the foreseeable future. The furnace will last for 20 years from initial use, at which point it will need to be replaced and will have no salvage value. (Specifically, the firm pays for the furnace at time 0 and then reaps higher net cash flows from that investment at the end of years 1-20.) The discount rate is 8%. a. What is the net present value of the investment in the furnace? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. b. What is the IRR? Note: Do not round…
- A new furnace for your small factory is being installed right now, will cost $38,000, and will be completed in one year. At that point, it will require ongoing maintenance expenditures of $1,200 a year. But it is far more fuel-efficient than your old furnace and will reduce your consumption of heating oil by 3,500 gallons per year. Heating oil this year costs $2 a gallon; the price per gallon is expected to increase by $0.50 a year for the next 3 years and then to stabilize for the foreseeable future. The furnace will last for 20 years from initial use, at which point it will need to be replaced and will have no salvage value. (Specifically, the firm pays for the furnace at time 0 and then reaps higher net cash flows from that investment at the end of years 1 – 20.) The discount rate is 8%. What is the net present value of the investment in the furnace? Note: Do not round intermediate calculations. Round your answer to the nearest whole dollar. What is the IRR? Note: Do not round…A new furnace for your small factory is being installed right now, will cost $36,000, and will be completed in one year. At that point, it will require ongoing maintenance expenditures of $1,000 a year. But it is far more fuel-efficient than your old furnace and will reduce your consumption of heating oil by 3,300 gallons per year. Heating oil this year costs $2 a gallon; the price per gallon is expected to increase by $0.50 a year for the next 3 years and then to stabilize for the foreseeable future. The furnace will last for 20 years from initial use, at which point it will need to be replaced and will have no salvage value. (Specifically, the firm pays for the furnace at time 0, and then reaps higher net cash flows from that investment at the end of years 1 – 20.). The discount rate is 6%. Please show answers in Excel with the formulas. A. What is the net present value of the investment in the furnace? (Do not round intermediate calculations. Round your answer to the nearest whole…A new furnace for your small factory is being installed right now, will cost $46,000, and will be completed in one year. At that point, it will require ongoing maintenance expenditures of $4,000 a year. But it is far more fuel-efficient than your old furnace and will reduce your consumption of heating oil by 4,300 gallons per year. Heating oil this year costs $3 a gallon; the price per gallon is expected to increase by $0.50 a year for the next 3 years and then to stabilize for the foreseeable future. The furnace will last for 20 years from initial use, at which point it will need to be replaced and will have no salvage value. (Specifically, the firm pays for the furnace at time 0, and then reaps higher net cash flows from that investment at the end of years 1 – 20.). The discount rate is 10%. a. What is the net present value of the investment in the furnace? (Do not round intermediate calculations. Round your answer to the nearest whole dollar.) $60,693 b. What is the IRR? (Do not…
- A new furnace for your small factory is being installed right now, will cost $46,000, and will be completed in one year. At that point, it will require ongoing maintenance expenditures of $4,000 a year. But it is far more fuel-efficient than your old furnace and will reduce your consumption of heating oil by 4,300 gallons per year. Heating oil this year costs $3 a gallon; the price per gallon is expected to increase by $0.50 a year for the next 3 years and then to stabilize for the foreseeable future. The furnace will last for 20 years from initial use, at which point it will need to be replaced and will have no salvage value. (Specifically, the firm pays for the furnace at time 0, and then reaps higher net cash flows from that investment at the end of years 1 – 20.). The discount rate is 10%. 1. What is the equivalent annual cost of the furnace? (Do not round intermediate calculations. Round your answer to 2 decimal places.) 2. What is the equivalent annual savings derived from the…A new furnace for your small factory is being installed right now, will cost $33,000, and will be completed in one year. At that point, it will require ongoing maintenance expenditures of $1,000 a year. But it is far more fuel-efficient than your old furnace and will reduce your consumption of heating oil by 3,000 gallons per year. Heating oil this year costs $2 a gallon; the price per gallon is expected to increase by $0.50 a year for the next 3 years and then to stabilize for the foreseeable future. The furnace will last for 20 years from initial use, at which point it will need to be replaced and will have no salvage value. (Specifically, the firm pays for the furnace at time 0, and then reaps higher net cash flows from that investment at the end of years 1 – 20.). The discount rate is 10%.If you buy the new machine you will be able to sell the existing machine for $6,000. The new machine will cost $10,000 for delivery and installation, on top of the purchase price. Making your product more quickly is important because you currently cannot meet the demands of your orders. You are currently selling every widget you produce. The machine will cost $100,000 today and will require annual maintenance of $5,000 each year (except for the final year), starting at the end of the first year. You expect that your machine will last for 8 years before you need to purchase the next machine. At that time, you expect you will be able to sell the machine for $7,800. You can buy the machine now and have it delivered and installed by tomorrow. You expect that you will sell 2,000 more widgets in year 1 and that this number will increase by 20% each year for the next 4 years after that before leveling off at that level of sales for the remaining years you own the machine. You can obtain more…
- A new furnace for your small factory is being installed right now, will cost $46,000, and will be completed in one year. At that point, it will require ongoing maintenance expenditures of $4,000 a year. But it is far more fuel efficient than your old furnace and will reduce your consumption of heating oil by 4, 300 gallons per year. Heating oil this year costs $3 a gallon; the price per gallon is expected to increase by $0.50 a year for the next 3 years and then to stabilize for the foreseeable future. The furnace will last for 20 years from initial use, at which point it will need to be replaced and will have no salvage value. (Specifically, the firm pays for the furnace at time 0 and then reaps higher net cash flows from that investment at the end of years 1 - 20.) The discount rate is 10%. a. What is the net present value of the investment in the furnace? Note: Do not round intermediate calculations. Round your answer to the nearest whole dollar. b. What is the IRR? Note: Do not…A new furnace for your small factory will cost $34000 and a year to install will require ongoing maintenance expenditures of $2200 a year. but it is far more fuel-efficient than your old furnace and will reduce your consumption of heating oil by 3100 gallons per year. Heating oil this year will cost $3 a gallon; the price per gallon is expected to increase by $0.50 a year for the next 3 years and then to stabilized for the foreseeable future. the furnace will last for 20 years, at which point it will need to be replaced and will have no salvage value. the discount rate is 12%. 1. what is the net present value of the investment in the furnace? 2. What is the IRR? 3.What is the payback period? 4. What is the equivalent annual cost of the furnace? 5. What is the equivalent annual savings derived from the furnace? 6. Compare the PV of the difference between the equivalent annual cost and saving to your answer to part a. are the two measures the same or is one large?A retrofitted space-heating system is being considered for a small office building. The system can be purchased and installed for $114,000, and it will save an estimated 340,000 kilowatt-hours (kWh) of electric power each year over afive-year period. A kilowatt-hour of electricity costs $0.08. The market value, additional annual operating and maintenance expenses are negligible. What is the benefit-cost ratio of the project if the general inflation rate is 3% per year? The market interest rate = (im) is 22% per year, and the annual savings are expressed in year- zero dollars. Use the benefit-cost method to make a recommendation. The benefit-cost ratio of the system with PW is