Street lighting fixtures and their sodium vapor bulbs for a two-block area of a large city need to be installed at a first cost(investment cost) of $140,000. Annual maintenance expenses are expected to be $6,600 for the first 5 years and$9,500 each year thereafter upto 30 years. With an interest rate of 6% per year, what is the present worth cost of thisproject?Choose the closest answer below.A. The present worth cost of the project is $298,567.B. The present worth cost of the project is $258,550.C. The present worth cost of the project is $289,243.D. The present worth cost of the project is $361,614.

Present worth The present value method refers to calculating the present value of future cash. The…

Answered: Street lighting fixtures and their…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 10PA: The Ham and Egg Restaurant is considering an investment in a new oven that has a cost of $60,000,...

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If a garden center is considering the purchase of a new tractor with an initial investment cost of $120,000, and the center expects a return of $30,000 in year one, $20,000 in years two and three. $15,000 In years four and five, and $10,000 in year six and beyond, what is the payback period?
If a copy center is considering the purchase of a new copy machine with an initial investment cost of $150,000 and the center expects an annual net cash flow of $20,000 per year, what is the payback period?
Gina Ripley, president of Dearing Company, is considering the purchase of a computer-aided manufacturing system. The annual net cash benefits and savings associated with the system are described as follows: The system will cost 9,000,000 and last 10 years. The companys cost of capital is 12 percent. Required: 1. Calculate the payback period for the system. Assume that the company has a policy of only accepting projects with a payback of five years or less. Would the system be acquired? 2. Calculate the NPV and IRR for the project. Should the system be purchasedeven if it does not meet the payback criterion? 3. The project manager reviewed the projected cash flows and pointed out that two items had been missed. First, the system would have a salvage value, net of any tax effects, of 1,000,000 at the end of 10 years. Second, the increased quality and delivery performance would allow the company to increase its market share by 20 percent. This would produce an additional annual net benefit of 300,000. Recalculate the payback period, NPV, and IRR given this new information. (For the IRR computation, initially ignore salvage value.) Does the decision change? Suppose that the salvage value is only half what is projected. Does this make a difference in the outcome? Does salvage value have any real bearing on the companys decision?
The Ham and Egg Restaurant is considering an investment in a new oven that has a cost of $60,000, with annual net cash flows of $9,950 for 8 years. The required rate of return is 6%. Compute the net present value of this investment to determine whether or not you would recommend that Ham and Egg invest in this oven.
A restaurant is considering the purchase of new tables and chairs for their dining room with an initial investment cost of $515,000, and the restaurant expects an annual net cash flow of $103,000 per year. What is the payback period?
Street lighting fixtures and their sodium vapor bulbs for a two-block area of a large city need to be installed at a first cost (investment cost) of $100,000. Annual maintenance expenses are expected to be $6,650 for the first 9 years and $9,500 each year thereafter upto 30 years. With an interest rate of 8% per year, what is the present worth cost of this project? Choose the closest answer below OA. The present worth cost of the project is $236,701. OB. The present worth cost of the project is $248,491. OC. The present worth cost of the project is $189,145 OD. The present worth cost of the project is $281,813 27
Street lighting fixtures and their sodium vapor bulbs for a two-block area of a large city need to be installed at a first cost (investment cost) of $120,000. Annual maintenance expenses are expected to be $6,500 for the first 20 years and $8,500 for each year thereafter. The lighting will be needed for an indefinitely long period of time. With an interest rate of 10% per year, what is the capitalized cost of this project (choose the closest answer below)? (a) $178,313 (b) $188,000 (c) $202,045 (d) $268,000.
A landfill has a first cost of $274,000. Actual operating and maintenance costs for the first year will be $48,000. and increase each year by 10%. Expected income for the landfill will be $142,000 each year in actual dollars. The landfill will be operating for 10 years. Inflation will average 5.4%, and a real return of 3.1% is desired. What is the present worth of this project using: a. A then-current (actual dollar) analysis. $ Round entry to two decimal places. The tolerance is ±20. b. A constant dollar analysis. $ Round entry to two decimal places. The tolerance is ±20.
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Golden Country Homes are to install a street lighting that costs $120,000. Annualmaintenance costs are expected to be $65,000 for the first 20 years and $85,000 foreach year thereafter. The lighting will be needed for an indefinitely long period oftime. With an interest rate of 10% per year, what is the capitalized cost of thisproject?
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You are considering purchasing a new punch press machine. This machine will have an estimated service life of 10 years. The expected after-tax salvage value at the end of service life will be 10% of the purchase cost. Its annual after-tax operating cash flows are estimated to be $60,000. If you can purchase the machine at $308,758, what is the expected rate of return on this investment? Answer in Excel

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