The heat loss through the windows of a home is estimated to cost the homeowner $338 per year in wastedenergy. Thermal windows will reduce heat loss by 92% and can be installed for $1444. The windows willhave no salvage value at the end of their estimated life of 12 years. Determine the net present equivalentvalue of the windows if the interest rate is 9%.S

The Net Present Value (NPV) is employed to evaluate a sequence of cash flows occurring at different…

Answered: The heat loss through the windows of a…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Davis Inc. is considering purchasing equipment costing $60,000 with a 6-year useful life. The equipment will provide cost savings of $14,600 and will be depreciated straight-line over its useful life with no salvage value. Cleaners requires a 10% rate of return. Present Value of an Annuity of 1 Period 8% 9% 10% 11% 12% 15% 6 4.623 4.486 4.355 4.231 4.111 3.784 What is the approximate net present value of this investment?
New windows are expected to save $950 per year in energy costs over their 30-year life for Fab Fabricating. At an initial cost of $12,000 and zero salvage value. What is the internal rate of return? Note: If Fab's MARR is 8 percent. Does the IRR provide a good deal? (No response required just think about what this means)
Consider a machine purchased one year ago for $18,000. The machine is being depreciated $3,000 per year throughout a six-year period. Its current market value is $6,000, and the expected market value of the machine one year from now is $4,000. If the interest rate is 10%, the expected cost of holding the machine during the next year is $___.
A customer is going to buy a brand new pump and motor. It has an initial cost of $10,000. The lifetime of the pump is fifteen years and is estimated to save about $1,000 per year. There is also an additional cost of maintenance at $300 per year with the pump. At the end of its lifetime, the pump will have a salvage value of $0. The interest rate is at 4%. Find the annual value of the pump and what is the salvage value for the pump in order to break even?
The system in an energy conservation option has a first cost of $25,000. It requires $2,000 per year maintenance and saves $5,000 per year in utilities. This option will last 15 years with no salvage value. What is the 15-year life cycle cost assuming energy cost escalation of 4% annually, maintenance cost escalation 2% annually, and a 5% discount rate? What if the discount rate is 15%?
Blue Spruce, Inc. is considering purchasing equipment costing $84000 with a 6-year useful life. The equipment will provide annual cost savings of $22600 and will be depreciated straight-line over its useful life with no salvage value. Blue Spruce requires a 10% rate of return. Present Value of an Annuity of 1 Period 8% 9% 10% 11% 12% 15% 6 4.623 4.486 4.355 4.231 4.111 3.784 What is the approximate net present value of this investment? $17384 $11620 $14423 $51600
The expenses included in the fabrication of a wind turbine for a planned Wind Farm is $73,000 annually. A wise Electrical Engineer developed an alternative that by spending $16,000 now to modify the rotor blades and adjust the gear box, the yearly cost will decrease to $58,000 next year and $52,000 at the end of year 2 until 5. If the interest rate is 10% per year, what is the present worth of the cost savings because of the modification and adjustment?
Two options are available for painting your house: (1) Oil-based paint, whichcosts $5,000 and (2) water-based paint, which costs $3,000. The estimated livesare 10 years and 5 years respectively. For either option, no salvage value isexpected at the end of respective service lives. Assume that you will keep andmaintain the house for 10 years. At an interest rate of 10%, which of the following statement is correct?(a) On an annual basis, Option 1 will cost about $850(b) On an annual basis, Option 2 is about $22 cheaper than Option 1(c) On an annual basis, both options cost about the same(d) On an annual basis, Option 2 will cost about $820.
A company is considering buying a new piece of machinery. the initial cost of the machine is 80,000 and its salvage value is 20,000 at the end of 20 years. annual operating cost is 18,000. what is the equivalent uniform annual cost of the machine based on 10% interest rate?
An untreated electric wooden pole that will last 15 years under a certain soilcondition costs P1500. If a treated pole will last for 25 years, what is themaximum justifiable amount that can be paid for the treated pol, if themaximum return on investment is 15%? Consider annual taxes and insuranceamount to 2% of first cost.
A conveyor system costs $110,000 to install. The salvage value of the conveyor system decreases by $20,000 each year until its salvage value is $0, at which point it no longer decreases. The cost to operate and maintain the conveyor system the first year is $20,000; this cost increases by 7% per year. What is the optimal replacement interval and minimum EUAC for the conveyor system, assuming a MARR of 15% is used? Click here to access the TVM Factor Table Calculator. years ORI: EUAC*: $ Carry all interim calculations to 5 decimal places and then round your final answers to a whole number. The tolerance is ±10 for the EUAC*. eTextbook and Media Hint Assistance Used Construct an Excel® table that computes the EUAC for different values of n. This will help you to find EUAC*, from which you can deduce the optimal replacement interval.
Concord, Inc. is considering purchasing equipment costing $48000 with a 6-year useful life. The equipment will provide annual cost savings of $12000 and will be depreciated straight-line over its useful life with no salvage value. Concord requires a 10% rate of return. Period 8% 6 9% 4.623 4.486 Present Value of an Annuity of 1 11% 10% 4.355 4.231 4.111 3.784 O 109 O 0.73 O 106 O 1.25 What is the approximate profitability index associated with this equipment? Save for Later O 100 12% 47 15% A Attempts: 0 of 1 used Submit Answer F10 F11 F12 Pr

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