A newly constructed water treatment facility costs $2 million. It is estimated that the facility will need revamping to maintain the original design specification every 30 years at a cost of $1 million. Annual repairs and maintenance costs are estimated to be $100,000. At an interest rate of 8%, determine the capitalized cost of the facility, assuming that it will be used for an indefinite period.
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- 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 construction cost of a permanent water park is $550,000. Annual maintenance and operation costs are $100,000 per year. A) At an interest rate of 7% per year, find the capitalized cost of the park in present worth. (Hint: a capitalized cost is when every cost is brought to present worth, in this case the upfront construction costs are current). B) What would be the annualized cost if the whole project was to be financed over 25 years at 6% interest?A bridge that was constructed at a cost of $80,000 is expected to last 50 years, at the end of which time its renewal cost will be $50,000. Annual repairs and maintenance costs are $5,000. What is the capitalized cost of the bridge at an interest rate of 8%?
- 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)A site is under consideration for a bridge over a small river. The suspension bridge will cost $500M with annual inspection and maintenance cost of $350,000. In addition, the concrete deck would have to be reconstructed every 10 years at a cost of $1M. The cost of purchasing the right of way is expected to be $20M. find the capitalized cost.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%
- A 10 kW home wind turbine is being planned for acquisition and installation at a cost of$65,000. During its useful life it is expected to generate an annual gross income of $8000. Thecost to house the machine is $100 per year. Its maintenance cost is projected to be $500 peryear. Draw a cash flow diagram, determine the payback period for the machine, and indicatethis payback period on the CFD.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?A proposed cost-saving device has an installed cost of $785,000. The device will be used in a five-year project but is classified as three-year MACRS property for tax purposes (MACRS schedule). The required initial net working capital investment is $75,000, the tax rate is 25 percent, and the project discount rate is 9 percent. The device has an estimated Year 5 salvage value of $115,000. What level of pretax cost savings do we require for this project to be profitable? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
- An investment of $20,000 for a new condenser is being considered. Estimated salvage value of the condenser is $5,000 at the end of an estimated life of 6 years. Annual income each year for the 6 years is $8,500. Annual operating expenses are $2,300. Assume money is worth 15% compounded annually. Determine the external rate of return and whether or not the condenser should be purchased.A proposed cost-saving device has an installed cost of $765,000. The device will be used in a five-year project but is classified as three-year MACRS property for tax purposes (MACRS schedule). The required initial net working capital investment is $67,000, the tax rate is 21 percent, and the project discount rate is 9 percent. The device has an estimated Year 5 salvage value of $103,000. What level of pretax cost savings do we require for this project to be profitable? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Pretax cost savingsThe cost of maintaining a certain permanent monument in Washington, DC occurs as periodic outlays of $2000 every year, $5000 every 3 years. Calculate the capitalized cost of the maintenance using an interest rate of 8% per year.