This problem build son the prior one. Company A has a three-year contract to build a bridge for a local city for $20 million. At the start of the contract, Company A estimates the total costs will be $17 million. In year one, Company A completes 1/3 of the work. In Year 2, Company A completes another third of the work, but it now believes the total costs will be $18 million, not $17 million. If the company uses the percentage of completion method, approximately how much gross profit on the contract will it recognize in Year 2? None O $1 million $333,333 $$666,666 and the prior year gross profit will be restated as $666,666
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- A university is trying to determine how much it should charge for tickets to basketball games to help offset the expenses of the new arena. The cost to build the arena including labor, materials. e tc. was $92 million. Each year the maintenance cost is expected to increase by 5% as the building gets older. 1l1e maintenance cost for the first year is $150.000. Utilities arc expected to average about $200.000 per year and labor costs $300,000. The average attendance at basketball games over the year is expected to be 100,000 people (or 100,000 tickets sold to events). Assuming the arena has no other source of income besides regular ticket sales (not including student tickets) for basketball games, what should the university charge so that it can recover at least a 6% cost of borrowing on its investment? The university expects the arena to be used for 40 years and 10 have no appreciable salvage value1. The Luna Corporation is trying to decide if they should purchase a Truck for hauling material which costs $625,400. The Truck will require $30,600 of working capital and major maintenance in years 3, year 5, and year 7. The major maintenance will cost $50,000 in years 3 and 5 and $65,000 in years 7. The truck will increase the net income by $185,750 in years 1 through 4, and $91,250 in years 5 through 7. At the end of year 7, the company expects to sell the truck for 5% of the cost that they paid for it. Calculate the net present value of the Truck using a 10% rate of return. Show your work and indicate if the Luna Corporation should purchase the Truck. PLEASE PUT IN SIMPLEST FORMA company in the region is planning for a new project that requires an investment in new machinery. The cost of machinery is RO 20,000. The total expenses to transport and install the machinery will be RO 5,000. Since the machinery uses the latest technology, it will result in a reduction of overall cost by RO 10,000. The company offers free maintenance for the machinery. Savings on account of the free maintenance will be RO 1,000 every year. The annual contract requires the company to pay RO 1,500 every year for vendor support. The total life of the project will be five years and it is expected that the machinery can be disposed at the end for 2,000. Straight-line depreciation is used by the company. The effective tax rate is 15%. Calculate Relevant Cash Flows for Capital Project 9050 9010 8765 9500
- A city plans to upgrade its storm water management infrastructure by installing new pipes. The installation costs 2.7 million dollars and the annual maintenance cost is $27,000. Every 8 years, the system needs to be fully examined which requires a fixed management and material cost of $20,000 and a variable labor cost at the rate of $27/hr. 20 full time (working 8 hours per day) workers will be employed for 80 days for this task. If the infrastructure has a life time of 96 years and the city's interest rate is 7%, (Please round your answer to two decimal places at the million level for both questions, e.g. '1.23' millions) a. what is the capitalized worth of the project (in millions)? Please note that the value could be negative.Eight years ago, the Blank Block Building Company installed an automated conveyor system for $38,000. When the conveyor is replaced, the net cost of removal will be $2500. The minimum EUAC of a new conveyor is $6500. When should the conveyor be replaced if BBB’s MARR is 12%? The O&M costs for the next 5 years are $5K, $6K, $7K, $8K, and $9K.A construction company operates a bulldozer that initially costs $28,000. The first year maintenance is $600, the second year is $900, and $1200 the third year. The salvage value at the end of the third year is $15,000. If the company decides to keep the bulldozer beyond the third year, the maintenace costs are: $900 the fourth year, $1150 the fifth year, $1300 the sixth year. There is a $7000 cost at the end of the third year if the bulldozer is kept. The salvage value at the end of six years is $10,000. If the bulldozer is kept for two more years, another overhaul at the end of the sixth year will cost $14,000. Maintenance costs will be $9900 at the end of the seventh and eighth years. Compare the annual costs if the bulldozer is kept for three years, six years, or eight years. Assume the eight-year salvage value is zero. Use 10%
- Two designs are suitable for housing track and field events. Design N costs $800,000 with annual upkeep costs including maintenance, repair, heat, and janitor service, of $25,000 a year. Its life is expected to be permanent. Design T costs $450,000 with annual upkeep costs for the previous items of $35,000 a year. However, with this design, repairs costing $15,000 will be required every 5 years, and the life will be 25 years with a probable salvage at that date of $50,000. The minimum required rate of return is 10%. Use present worth analysis to compare these two alternatives.A small chemical manufacture company needs to replace an old high-shear mixer. Two different models have been proposed. • Model A costs $250,000 for purchasing and installation. The model has service life of 6 years and at the end of the sixth year has estimated salvage value of $50,000. The model in the first year has an operational and malntenance (O&M) cost of $24,000 and the cost increases each year by 5% over the previous year's O&M cost. • Model B costs $175,000 for purchasing and installation. The model has service life of 3 years and at the end of the third year has estimated salvage value of $30,000. The model in the first year has an operational and maintenance (O&M) cost of $11,000 and the cost increases cach year by 7% over the previous year's O&M cost. If the company has MARR of 10%, select the correct statement. O Select Model A because it has annual equivalent cost of $77,764 which is less than Model B O Select Model B because it has annual equivalent cost of $73,044…A bulk-water supplier has been awarded by a city to supply their potable water for the next 10 years. The city will pay the supplier $150,000 per year during the 10-year contract. The supplier needs to set-up an additional water purification facilities that will have a first cost of $250,000 with an estimated salvage value of 10% of its first cost after 10 years. The operating cost is difficult to estimate, but company engineers have made optimistie, most likely, and pessimistic estimates. The optimistic estimate is that the operating cost will just be constant at $75,000 per year. The most likely estimate is that it will be $75,000 initially and will increase by $5,000 per year. The pessimistic estimate is that it will be $75,000 initially increasing at a rate of 10% per year. Determine if at which operating scenario the supplier will be able to make the most profit. The before tax MARR is 18% per year.
- TO REMEDY THE TRAFFIC SITUATION AT A BUSY INTERSECTION IN QUEZON CITY, TWO PLANS ARE BEINGCONSIDERED:PLAN AIS TO BUILD A COMPLETE CLOVER-LEAF COSTING P 9,200,000.00 WHICH WOULD PROVIDE FOR ALL NEEDSDURING THE NEXT 30 YEARS. MAINTENANCE COSTS ARE ESTIMATED TO BE P 2,000.00 A MONTH FOR THE FIRST15 YEARS AND P 3,500.00 A MONTH FOR THE SECOND 15 YEARS.PLAN BIS TO BUILD A PARTIAL CLOVER-LEAF AT A COST OF P 6,500,000.00 WHICH WOULD BE SUFFICIENT FOR THENEXT 15 YEARS. AT THE END OF 15 YEARS, THE CLOVER-LEAF WILL BE COMPLETED AT AN ESTIMATED COSTOF P 7,500,000.00. MAINTENANCE WOULD COST P 1,400.00 A MONTH DURING THE FIRST 15 YEARS AND P 3,500.00A MONTH FOR THE SECOND 15 YEARS.IF MONEY IS WORTH 8%, WHICH OF THE TWO PLANS WOULD YOU RECOMMEND? USE PRESENT WORTH OFCOST METHOD.K A highway bridge is being considered for replacement. The new bridge would cost $X and would last for 24 years. Annual maintenance costs for the new bridge are estimated to be $27,000. People will be charged a toll of $0.22 per car to use the new bridge. Annual car traffic is estimated at 360,000 cars. The cost of collecting the toll consists of annual salaries for six collectors at $9,000 per collector. The existing bridge can be refurbished for $1,400,000 and would need to be replaced in 24 years. There would be additional refurbishing costs of $80,000 every five years and regular annual maintenance costs of $17,000 for the existing bridge. There would be no toll to use the refurbished bridge. If MARR is 10% per year, what is the maximum acceptable cost (X) of the new bridge? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10per year. Choose the correct answer below. .... A. The maximum acceptable cost of the new bridge is $1,668,576.…CHA Letang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt systems. System A costs $350,000, has a four-year life, and requires $141,000 in pretax annual operating costs. System B costs $430,000, has a six-year life, and requires $135,000 in pretax annual operating costs. Both systems are to be depreciated straight-line to zero over their lives and will have zero salvage value. Whichever project is chosen, it will not be replaced when it wears out. The tax rate is 22 percent and the discount rate is 8 percent. Calculate the NPV for both conveyor belt systems. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. System A System B $ $ -441,510.00 X -548,899.00 Which conveyor belt system should the firm choose?