A small bridge can be constructed for $ 20,000 with a life of 30 years, after which it can be rebuilt at the same cost. Maintenance cost for the 30 - year life are estimated to be $ 1,000 each year for the first 5 years, and increase to $ 1,500 in the succeeding years thereafter. Compute the capitalized cost of the bridge at 12%. a. $ 32,526 b. $ 33,459 c. $ 31,388 d. $ 34,128

A small bridge can be constructed for $ 20,000 with a life of 30 years, after which it can be rebuilt at the same cost. Maintenance cost for the 30 - year life are estimated to be $ 1,000 each year for the first 5 years, and increase to $ 1,500 in the succeeding years thereafter. Compute the capitalized cost of the bridge at 12%. a. $ 32,526 b. $ 33,459 c. $ 31,388 d. $ 34,128

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter11: Capital Budgeting And Risk

Section: Chapter Questions

Problem 15P

See similar textbooks

Similar questions

A small bridge can be constructed for $ 20,000 with a life of 30 years, after which it can be rebuilt at the same cost. Maintenance cost for the 30 - year life are estimated to be $ 1,000 each year for the first 5 years, and increase to $ 1,500 in the succeeding years thereafter. Compute the capitalized cost of the bridge at 12%. Select one: a. $ 33,459 b. $ 34,128 c. $ 31,388 d. $ 32,526
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
A bridge that was constructed at a cost of P 75,000 is expected to last 30 years, at the end of which time its renewal cost will be P 40,000. Annual repairs and maintenance are P 3,000. What is the capitalized cost of the bridge at an interest of 6%? 133,433.00 50,000.00 125,000.00 140,625.00 75,948.67 58,433.00
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 new bridge with a 100-year life is expected to have an initial cost of $25 million. This bridge must be resurfaced every ten years at a cost of $2 million. The annual operating costs are estimated to be $55000. Determine the approximate present worth cost of the bridge using the capitalized worth method (take the life of the bridge as infinite). Use interest rate of 15% per year. 26.02 million dollars 25.77 million dollars 25.47 million dollars 0.47 million dollars 25.86 million dollars
The cost of maintaining a public monument in Washington, D.C. occurs as periodic outlays of $10,000 every 5 years. If the first outlay is 5 years from now, the capitalized cost of the maintenance at an interest rate of 10% per year is closest to:a. $-1638b. $-16,380c. $-26,380d. $-29,360
The following data pertain to an investment currently being considered by Kalamazoo Corporation: Investment in the project: $14,000 Net annual cash inflows: 2,800 Working capital: 5,000 Salvage value: 1,000 Life of the project: 10 years The working capital would be released for use elsewhere when the project is completed. What is the net present value of the project, using a discount rate of 8% $2,566 ($251) $251 $5,251
A newly constructed bridge costs $10,000,000. The same bridge is estimated to need renovation every 10 years at a cost of $1,000,000. Annual repairs and maintenance are estimated to be $100,000 per year.(a) If the interest rate is 5%, determine the capitalized-equivalent cost of the bridge.{b) Suppose that the bridge must be renovated every 15 years, not every10 years. What is the capitalized cost of the bridge if the interest rate is thesame as in (a)?(c) Repeat (a) and (b) with an interest rate of 10%. What can you say about the effect of interest on the results?
Cost estimates for a porposed public facility are being evaluated. Initial construction cost is anticipated to be $120,000 and annual maintenance expenses are expected to be $6500 for the first 20 years and $2000 for every year thereafter. The facility is to be used and maintained for an indefinite period of time. Using an interest rate of 10% per year, the capitalized cost of this facility is most nearly? a. $180,000 b. $190,000 c. $200,000 d. $270,000
An investment is made with an expenditure of $150,000 at the start of the project. The income from the project at the end of each year for 5 years is $80,000, $90,000, $85,000, $70,000 and $60,000. The maintenance will cost 3000 $ for the first year and it increments by 2000$ from second year onwards. The salvage value is $65000. Draw a CFD for the project and give the analysis of the project based on the CFD.
A bridge with an initial cost of P50,000,000 has a life of 20 years. The bridge must be partially re-built at the end of each 20 years at a cost of P10,000,000. It will have an annual operating cost of P1,000,000 for the first 10 years and P500,000 thereafter. At 6% annual interest; Determine Case I Capitalized Cost a. 54,530,759 b. 59,658,254 c. 59,319,917 d. 54,789,158
Consider a capital expenditure project that has forecasted revenues equal to $32,000 per year; cash expenses are estimated to be $29,000 per year. The cost of the project equipment is $23,000, and the equipment’s estimated salvage value at the end of the project is $9,000. The equipment’s $23,000 cost will be depreciated on a straight-line basis to $0 over a 10-year estimated economic life. Assume that the project requires an initial $7,000 working capital investment. The company’s marginal tax rate is 30%. Calculate the project’s net present value using a 12% discount rate.