A project study for the construction of an engineering building are under consideration. Based on the study the cost of the building is P6,500,000 with a life of 30 years and a salvage value of P400,000. Yearly maintenance and repair is P18,000. If the yield of the investment is 6%, determine the equivalent uniform annual cost. Select the correct response: 485,581.36 458,581.36 485,158.36 458,158.36

A project study for the construction of an engineering building are under consideration. Based on the study the cost of the building is P6,500,000 with a life of 30 years and a salvage value of P400,000. Yearly maintenance and repair is P18,000. If the yield of the investment is 6%, determine the equivalent uniform annual cost. Select the correct response: 485,581.36 458,581.36 485,158.36 458,158.36

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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A Project study for the construction of an engineering building are under consideration. Based on the study the cost of the building is P6,500,000 with a life of 30 years and a salvage value of P 400,000. Yearly maintenance and repair is P 18,000. If the yield of investment is 6%, determine the future worth cost.
A company wants to undertake an investment and has two projects under consideration. Project 1 will have a useful life of 7 years whereas project 2 would have a useful life of 6 years. Project 1 would also require an initial investment of GHc300,000 plus an additional repair cost of GHc20,000 on year 6. Project 2 would also require an initial investment of GHc240,000 plus an additional repair cost of GHc25,000 in years 4 and 5. Project 1 and 2 have an estimated salvage value of GHc5000 and GHC3000 respectively. Due to different project risk, project 1 and project 2 would be evaluated at an interest rate of 10% and 12% per year respectively. Project profits are estimated to be GHc100,000 and GHc100,000 per year respectively for both projects starting at the end of year 1 till the end of their respective project lifespans. Using the NPV approach, determine which project the company must invest in.
You are required to investigate the following project: The initial Investment at n=0 is $100,000. The project life is 10 years. Estimated annual operating cost : 34,000. The required minimum return on the investment :14%. The salvage value 8,000. What is the minimum annual revenues that should be generated to make the project worthwhile? 97842 52758 81921 45716 O O O O
The construction of a bypass road needs a capital investment of $200,000 and $10,000 would be required each year for maintenance. The annual benefits to the project have been estimated to be $60,000. The study period(estimated life) of the project is 10 years. The MARR is set at 12%. a. What is the discounted payback period(in years)? b. Determine whether this is a good investment using Modified Benefit-Cost Ratio method with Present Worth(PW). c. Using Conventional Benefit-Cost Ratio method with PW but the MARR is set at 12%, is this project acceptable?
Equipment A has a first cost of P50000, salvage value of P2000, life of equipment of 5 years and maintenance cost of P6000. Equipment B has a first cost of P150,000, salvage value of P6000, life of equipment of 15 years and maintenance cost of P3000. If the maximum rate or return is 12% annually for both equipment, find the ROR of additional investment of equipment B. Select the correct response: 4.51 6.69 13.45 7.52
A project has an initial investment of $45,000. This project needs an annual spending of $6,000 to generate an annual revenue of $18,000 for six years. Moreover, the project is expected to return $12,000 as a salvage value at the EOY 6. Calculate the AW using MARR of 10%
A posed capital expenditure project involves purchasing and installing new equipment. The equipment will cost $40.000, with an addiuonal S2.00 e for delivery. Installation is estimated to be $5000. The equipment has an expected life of 6 years and estimated salvage value of 520,000. The prctrequires an additional working capital investment of $10.000. The project revenues are forecast at $30.000 per year and cash expenses are estimated at $10.000 per year. The firm has a 35 marginal tax rate and a 10is weighted average cost of capital. Annual depreciation is expected t increase by $7,833.33 per year, assuming simplified straight-line depreciation. Calculate the one-time, end of project cash fiows from this propose project. $23,000 $30,000 O$13,000 O $20,000 None of the listed items is correct
A piece of equipment has an initial cost of $125,000. The annual 0&M costs are $31,000 and increase $1000 per year. The annual revenue is $45,000 and increase $1,500 per year. The equipment has a life span of 8 years and a salvage value of $30,000. Based on a MARR of 5%, determine the following: a. If the project is viable based on Net Present Worth. b. Determine the amount the annual revenue has to be increased to make the project viable. c. Determine the amount the salvage value has to increase to make the project viable.
Determine the Rate of Return (ROR) for the following project. Initial Capital Investment (P) = $2,942,825 Project Life (n) = 10 years Salvage Value at the end of year 10 $50,000 Equal Annual Revenues = $1,100,000 Equal Annual Operations and Maintenance Costs (AOC) = $400,000 Minimum Acceptable Rate of Return (MARR) = 22% ycy %3D %3D %3D That is the ROR of the project (to the nearest 1%)?
a potential project is currently under review an investment of $87000 would be necessary for equipment. the annual revenues and expenses are expected to be $40000 and 19000 each year respectively over the 6-year project period. the salvage value of the equipment at the end of the project period is projected to be $17,000. Assume a MARR of 9%. find the B-C(to the nearest cent).
A project with a life of 8 has an initial fixed asset investment of $9,660, an initial NWC investment of $920, and an annual OCF of -$14,720. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required return is 12 percent, what is the project's equivalent annual cost, or EAC? Multiple Choice $-16,774.99
Two types of power converters are under consideration for a specific application. An economic comparison is to be made using a MARR of 10% and the following cost estimates: Alternative Model A Model B Service Life (Years) 5 10 First Cost $10,000 $20,000 Salvage Value 0 5,000 Annual Operating Cost 2,500 1,200 Draw the Cash Fiow Diagram for each alfernative covering the entire analysis period. Compute the Net Present Worth for Model A? Compute the Net Equivalent Uniform Annual Worth for Model A? Which of these alternatives should be selected?

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