What is the capitalized cost of a structure that requires an initial investment of P1,500,000.00 and an annual maintenance of P150,000.00 with an interest of 15%.
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A: Option B is correct
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A: Present worth (PW) of option 1 can be calculated by using the following formula.
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A: The answer to the question is given below :
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- One of the following 2 machines will be selected. If return of 12% per year is required, by using PW method determine which machine is economically better? Why? Machine 1 6,000 Annual Net Income, $ 1,700 Machine 2 7,000 1,600 (years 1-6) 2,400 (years 7-10) Initial Investment, S Life, yearsA reservoir will initially cost P200M, have P1M in annual maintenance costs, and P5M in minor reconstruction costs every five years. The capitalised cost of the dam is closest to: with a 10% annual interest rate.Mr. Kim Seon Ho is renting out a piece of equipment, from which he earns an income pf $130,000 per year. The income decreases at a uniform amount of $5,000 each year after the first year. The expected life of the equipment is 12 years. The investment cost is $800,000 and interest rate is 8% per year. Assume that the investment occurs now (time zero), and the annual income is first received at the end of the second year. (a) Draw Mr. Kim's cash flow diagram. (b) Determine if this is a good investment for Mr. Kim. Use PW Method.
- At 20% cpd. monthly., find the capitalized cost of a bridge whose cost is P673777 with a life of 22 years, if the bridge must be rehabilitated at a cost of P218341 at the end of each 22 years.an engineer knows that the supplier of their set-5100 laser surface metrology system used on one of their lines superseded their 5100 model with the 5105. the new model has a net cost of $420000. adding the new 5105 model to the production line would in decrease scrap rate estimated to save 630000 in the first year. the rate of return for on the set-5105 purchase is 13% MEMD IS 15% what is the opportunity costA project your firm is considering for implementation has these estimated costs and revenues: an investment cost of $56417, a maintenance costs that start at $5,000 at end of year (FOY) one and increase by $1,000 for esch of the next four years, and then remain constant for the following five years; savings of $24851 per year (EOY 1-10); and finally a resale value of $31935 at EOY 10 If the project has a 10 year life and the firm's MARR is 10% per yeat, what is the present worth of the project?.
- Mary, a project manager for ABC Ic., is reviewing a product quality improvement project. She has determined that the project's Annual Worth of $3,396. for a period of 8 years. She now has to calculate the IRR for the project but unfortunately she has lost some information about the cash flows. She knows only that the project has: a 8-year project life with an initial cost of $400,000. a set of equal revenue cash flows occurred at the end of each year for 8 years, and • MARR used for calculation the Annual Worth was 8%. Find the annual revenue first and then calculate the IRR for the project = ? O 14% < IRR (i*) < 15% O 13% < IRR (i*) < 14% O 10% < IRR (i*) < 11% O 9% < IRR (i*) < 10% O 8% < IRR (i*) < 9%A company must relocate one of its factories in three years. Equipment for theloading dock is being considered for purchase. The original cost is P20,000, salvagevalue of the equipment after three years is P8,000. The company’s rate of return on themoney is 10%. Determine the capital recovery per year.An investment of P270,000 can be made in a project that will produce a uniform annual revenue of P185,400 for 5 years and then have a salvage value of 10% of the investment. Out-of-pocket cost for operation andmaintenance will be P81,000 per year. Taxes and insurance will be 4% of the first cost per year. The company expects capital to earn not less than 25% before income taxes. Is this a desirable investment? What is the payback period? Use the methods: (a) Future Worth Method(b) Present Worth Method
- A project capitalized for P5,000,000 is expected to earn a uniform annual revenue of P1,000,000 in 10 years. The cost of operation and maintenance is P100,000 a year, taxes and insurance will cost 3% of the first cost per year. If the company expects its capital to earn 12% income before taxes, would you recommend investing in the project? Use the PW method. Determine the present worth of income.Determine the present worth of cost.Will it be worthwhile to invest for the apartment?Abigail invests P4,520 for a period from January 26 to November 12, 2004. Given that the exact interest rate on the investment is 11.5% per year, what sum, in pesos, will be collected?A company would like to invest on a project. The rate the company uses to justify their investments, i.e. the MARR is 25% per year (compounded yearly). Their estimations about the projects are as follows: Initial Cost: ($300,000)The Study Period: 15 yearsSalvage (Market) Value of the Project: 20% of the initial cost 1-) What is the capital recovery cost, CR? 2-) Operating costs in the first year are estimated to be ($7,500) and these operating costs are estimated to increase by 5% per year. Construct cash flow table and determine the minimum amount of annual revenue ($ per year?) that makes this investment an attractive option for the company? (i.e. what is Equivalent UNIFORM (Annual) Cost, EU(A)C?) 3-) Benefits in in the first year are estimated to be $30,000 and these benefits are estimated to increase by 13% per year. Construct cash flow table and determine the net present value/worth of the project, NPW. 4-) What is the simple payback period? 5-) Determine IRR of…