A company is considering investing $17,500 in a heat exchanger. The heat exchanger will last five years, at which time it will be sold for $2,000. The maintenance cost at the end of the first year is estimated to be $1,500. Maintenance costs for the exchanger are estimated to increase by $1,000 per year over its life. As an alternative, the company may lease the equipment for $X per year, including maintenance, with the annual payments to made at the end of each year. a. Choose cash flow diagrams of both alternatives. b. For what value of X should the company lease the heat exchanger? The company expects to earn 8% on its investments. Assume end-of-year lease payments. Click the icon to view the interest and annuity table for discrete compounding when i= 8% per year. a. What is the cash flow diagram of the lease alternative? Choose the correct answer below. OA. OB. $10,000 ΕΟΥ $10,000 EOY 4. 2 3 4. X

Select the correct answer: 4) Compute the equivalent annual worth of an investment alternative that has an annuity of $2,000 for six (6) years and increase every year $200 from year two (2) to year seven (7) with an interest rate of 8%. $2,455.26 $2,369.30 $538.74 $2,538.74

Maintenance money for a new building at a college is being solicited from potential alumni donors. You would like to make a donation to cover all future expected maintenance costs of the building. These maintenance costs are expected to be $48,000 per year for the first five years, $60,000 per year for each of years 6 through 10, and $72,000 annually after that (toward infinity under the assumption that the building has an indefinite service life). If the money is placed in an account that will pay 15% annual interest, how large should your gift be? A = $48,000 01 A = $60,000 56 A = $72,000 10 11 In the previous question, what is the equivalent annual maintenance cost over the infinite service life?

. A construction company is considering two possibilities for warehouse operations. Proposal 1 would require the purchase of a forklift for $5,000 and 500 pallets that cost $5 each. The average life of a pallet is assumed to be 2 years. If the forklift is purchased, the company must hire an operator for $9,000 annually and spend $600 per year on maintenance and operation. The life of the forklift is expected to be 12 years with a $700 salvage value. Alternatively, proposal 2 requires that the company hire 2 men to operate power driven hand trucks at a cost of $7,500 per man. One hand truck will be required at a cost of $900. The hand truck will have a life of 6 years with no salvage value. If the company's minimum attractive rate of return is 12%, which alternative should be selected? Use the annual equivalent method.

Parker County Community College (PCCC) is trying to determine whether to use no insulation or to use insulation that is either 1 inch thick or 2 inches thick on its steam pipes. The heat loss from the pipes without insulation is expected to cost $1.80 per year per foot of pipe. A 1 - inch thick insulated covering will eliminate 83% of the loss and will cost $0.55 per foot. A 2-inch thick insulated covering will eliminate 92% of the loss and will cost $0.85 per foot. PCCC Physical Plant Services estimates that there are 295,000 feet of steam pipe on campus. The PCCC Accounting Office requires a 10.5%/year return to justify capital expenditures. The insulation has a life expectancy of 10 years. Click here to access the TVM Factor Table Calculator Part a Your answer is incorrect. What is the present worth of each option? No insulation: $1-inch insulation: $ 2 - inch insulation: $ Parker County Community College (PCCC) is trying to determine whether to use no insulation or to use…

You are considering buying a company for $699, 000. If you expect the business to earn $97,000 per year, how long is the discounted payback period if your MARR is 5% ? (in years)

A new computer network system is being considered for an organization. The initial cost of the system is $375,000. Annual maintenance and operating costs would be $22,000 per year. The organization has a desired rate of interest of 10% for its projects. The expected annual income from the computer network are expected to be $97,000. Determine the present worth if they are going to use it for four (4) years. PW = -$13,925 PW-$13,726 PW = $11,725 PW = $15,725.

A contractor is considering whether to buy or lease a new machine for her layout site work. Buying a new machine will cost $120,000, with a residual value of $12,000 after the machine's useful life of eight years. On the other hand, leasing requires an annual payment of $30,000, which occurs at the start of each year. MARR is 20%. On the basis of an internal rate of return analysis, which alternative should the contractor be advised to accept?

A new office building is expected to produce the initial net operating income (NOI) of $10 at time 1. The NOI is expected to grow 5% per year, and the investor expects an annual IRR of 15%. If the construction cost is $90, what is the land value at time 0?

An equipment costing $57,500 is being considered for a production process at Dewey Chemicals. The expected benefits per year is $4,500 and estimated salvage value is $10,000.  Determine the rate of return the company can get in this equipment proposal. Equipment life = 15 years.