A gas processing plant consists of 3 functional units; heating/pre-treatment, reaction. and separation, has a capacity of 55 000 tons/year and a turnover ratio of 1.25. 2.1. Predict what the cost of the plant is using Timm's correlation.
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- You must calculate the value of a container handling equipment for a terminal, which produces year end annual cash flows of $1,200 the first year, $2,000 the second year, $3,000 the third year, and $4,000 the fourth year.A) Assuming a weighted average cost of capital of 15 percent, what is the value of this equipment using the net present value (NPV) approach? B) If the cost of this equipment is $5,200 for the terminal, calculate the net present value. Would you buy this equipment for your terminal?A business is considering a project which will cost them initially OMR 20,000. The sales expected for the two-year duration is OMR 20,000 per year. The variable costs are OMR 2,000 per year. Cost of capital is 10%. 1. Calculate the sensitivity of the project NPV to change in initial investment? 2. Calculate the sensitivity of the project NPV to change in expected sales?Calculate the NPV of the proposed investment, using the inputs suggested in this case. How sensitive is this NPV to future sales volume? *The answer is 15.7 million; please show me the work.
- Given the initial investment in a factory processing equipment as Ghc500,037. Let the opportunity cost of capital for the industry be 10% p.a. Assuming that the equipment is capable of generating an after-tax returns of Ghc115,000 for the first 5 years and Ghc65000 for the 6th year and Ghc53400 for the 7th year. Find the Net Present Value (NPV) Determine the Internal Rate of Return Identify three ways in which the Net Present value is superior to the Internal Rate of return as investment criteriaGiven the initial investment in a factory processing equipment as Ghc500,037. Let the opportunity cost of capital for the industry be 10% p.a. Assuming that the equipment is capable of generating an after-tax returns of Ghc115,000 for the first 5 years and Ghc65000 for the 6th year and Ghc53400 for the 7th year. a. Find the Net Present Value (NPV) b. Determine the Internal Rate of Return c. Identify three ways in which the Net Present value is superior to the Internal Rate ofAssume a company is going to make an investment of $450,000 in a machine and the following are the cash flows that two different products would bring in years one through four. Which of the two options would you choose based on the payback method?
- Mason, Inc., is considering the purchase of a patent that has a cost of $85000 and an estimated revenue producing lite of 4 years. Mason has a required rate of return that is 12% and a cost of capital of 11%. The patent is expected to generate the following amounts of annual income and cash flows: A. What is the NPV of the investment? B. What happens if the required rate of return increases?A project is estimated to cost P120T, last 8 years & have a salvage value of P20T. The annual gross income is expected to average P40k & annual expenses is P6T. If capital is earning 12% determine if this a desirable investment using rate of return. What is your computed ROR? Select one: a. 20.07% b. 21.07% c. 17.17% d. 23.17%You are analyzing a project and have developed the following estimates: unit sales = 2,150, price per unit = $84, variable cost per unit = $57, fixed costs per year = $13,900. The depreciation is $8,300 a year and the tax rate is 35 percent. What effect would an increase of $1 in the selling price have on the operating cash flow?
- A project has an investment cost of $200,000 and a profitability index of 1.6. What is the net present value of the project? NPV=A production machinery system may be purchased either from either Hillebrand Corporation or Lotux Corporation. The Hillebrand system has an IRR of 30.5 and the Lotux system has an IRR of 40.8. The two projects happen to have equal net present value at a discount rate of 22.25%. The firms cost of capital is 18 percent. Explain with a graph, which project creates more value and which project should be chosen.CONSIDERING THAT: You want to make an initial investment of $100,000, and maintain a constant weighting of 40% for asset 1 and 60% for asset 2. CALCULATE: What would be the average rate of return on asset 1? What would be the average rate of return on asset 2? What would be the average rate of return of the portafolio?