Sta. Elena Golf & Country Estate wants to have a swimming pool in the vicinity. The general contractor presented a reinforced concrete design for the swimming pool which needs an initial investment of P21000000. By approximation of costs, refinishing including repaints of the inner surface would amount to P2750000 every 10 years. Determine the present worth of all costs assuming an infinite use for the pool. Prevailing rate of interest is 5%.

Sta. Elena Golf & Country Estate wants to have a swimming pool in the vicinity. The general contractor presented a reinforced concrete design for the swimming pool which needs an initial investment of P21000000. By approximation of costs, refinishing including repaints of the inner surface would amount to P2750000 every 10 years. Determine the present worth of all costs assuming an infinite use for the pool. Prevailing rate of interest is 5%.

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,...

See similar textbooks

Similar questions

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.
The required investment cost of a new, large shopping center is $52 million. The salvage value of the project is estimated to be $18 rmillon (the value of the land) The projects life is 18 years and the annual operating expenses ar estimated to be $13 million. The MARR for such projects is 22% per year. What must the minimum annual revenue be to make the shopping center a worthwhile venture? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 22% per year To make the shopping center a worthwhile venture, the minimum annual revenue must be S milion per year (Round to three decimal places)
An organization is planning to put up its own building. Two proposals being considered are:A. The construction of the building now to cost P 400,000 B. The construction of a smaller building now to cost P300,000 and at the end of 5 years, anextension to be added to cost P 200,000.By how much is proposal B more economical than proposal A if interest rate is 20% and depreciation to be neglected?
The following are the costs for one of the alternatives to construct a new bridge: Construction cost = $2200000 M Annual Maintenance cost = $48000 Renovation cost = $800000 every 15 years Based on an interest rate = 5% per year, what is the capitalized cost of this alternative? M R
4. A new bridge connecting Tuguegarao and Solana with a 100 year life is expected to have an initial cost of $20 M. The bridge must be resurfaced every five years at a cost of $ 1 M. The annual inspection and operating costs are estimated to be $50, 000. Determine the present cost of the bridge using the capitalized equivalent approach (that is the life of the bridge as infinite), if the interest rate is 10% per compounded annually. Draw the cashflow diagram.
Athena Books Company is contemplating the installation of a wastewater recycling system. The amount to be invested in this system is $400,000. The system is expected to last 8 years and has no salvage value. Which of the following situations supports the installation of the recycling system? Assume the present value factor for an annuity of $1 at 10% for 8 periods is 5.3349 and the present value factor for $1 at 10% for 8 periods is 0.4665. The total cash flow savings expected from the recycling system is $700,000. The annual maintenance cost for the system is $40,000. The annual maintenance cost for the system is equal to the cost of the existing water system. The recycling system will yield a savings of $78,000 per year.
A concrete pavement on a street would cost P2M and would last for 5 years. Minor maintenance cost is P 50,000 per year. At the end of each 5 years, P 100,000 would be spent to remove the old surface before P 1M is spent again to lay a new surface. Find the capitalized cost of the pavement at 6%. I'm confused about how to solve this one. Can you provide me with a written solution instead of an excel one? Thank you.
A commercial building is proposed to be built in a subdivision. The initial cost is estimated to be P20,500,000.00 with annual maintenance and operational cost of P480,000.00. For austhetic view, it is necessary to be painted every five years at a cost of P500,000.00. Annual income from tenants is expected to be P3,200,000.00. Assuming an annual interest rate of 9% and a 30-year planning horizon, find the benefit - cost ratio.
Striped Potato is evaluating a project that would require the purchase of a piece of equipment for $365,000 today. During year 1, the project is expected to have relevant revenue of $216,000, relevant costs of $57,000, and relevant depreciation of $84,000. Striped Potato would need to borrow $365,000 today to pay for the equipment and would need to make an interest payment of $14,000 to the bank in 1 year. Relevant net income for the project in year 1 is expected to be $44,000. What is the tax rate expected to be in year 1?
Bellevue Bell Inc. is trying to determine if it is financially viable to purchase a new metal melting machine. The cost of this machine is $135,376, and it is expected to have yearly expected cash flows of $32,000. The machine has a useful life of 6 years. If Bellevue will only fund projects with a minimum internal rate of return of 12%, determine the internal rate of return on the machine and recommend if Bellevue should purchase it or not.
XYZ is evaluating a project that would require the purchase of a piece of equipment for $580,000 today. During year 1, the project is expected to have relevant revenue of $756,000, relevant costs of $199,000, and relevant depreciation of $136,000. XYZ would need to borrow $580,000 today to pay for the equipment and would need to make an interest payment of $30,000 to the bank in 1 year. Relevant net income for the project in year 1 is expected to be $322,000. What is the tax rate expected to be in year 1? A rate equal to or greater than 19.95% but less than 24.42% A rate equal to or greater than 28.03% but less than 37.53% A rate equal to or greater than 37.53% but less than 51.10% A rate equal to or greater than 24.42% but less than 28.03% A rate less than 19.95% or a rate greater than 51.10%
Engr. Collado is using a 10% annual interest rate to decide if it should by cement mixer A with a gasoline engine or Cement Mixer B with a diesel engine. Cement Mixer A Cement Mixer B INITIAL COST Php 57500 Php 85800 LIFESPAN 10 years 10 years ANNUAL OPERATION AND Php 9000 Php 4700 MAINTENANCE ANNUAL BENEFITS Php 26000 Php 45000 SALVAGE VALUE Php 0 Php 19000 Which of the two is more economical in the long run?