Horizon value question A project involved initial construction costs of $1.75 million. After 15 years, the useful life of that construction will be over and the facility will be demolished, involving sensitive environmental protections and cleanup. You estimate that 25% of the cost of the facility represents items that could be sold for scrap at 30% of their initial construction cost. You estimate the proper demolition cost of such a facility to be $0.9M. a. What is the NPV of the horizon value if the real discount rate is 0.035? b. If the expected annual rate of inflation is 0.02, what is the nominal horizon value in 15 years?

Epsilon Corp. is evaluating an expansion of its business. The cash-flow forecasts for the project are as follows: Years 0 1-8 Cash Flow ($ millions) -120 17 The firm's existing assets have a beta of 1.6. The risk-free interest rate is 6% and the expected return on the market portfolio is 14%. What is the project's NPV? (Enter your answer in millions. A negative answer should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.) NPV ................ million

2. A municipality is considering an investment in a small renewable energy power plant with the following parameters. The cost is $400,000 and the output averages 50 kW year- round. The price paid for electricity at the plant gate is $0.037/kWh. The investment is to be evaluated over a 25-year time horizon, and the expected salvage value at the end of the project is $22,000. The MARR is 7%. [Total: 9 marks] a. Calculate the net present value (NPV) of this investment. Is it financially attractive? b. Calculate the operating credit per kWh which the government would need to give to the investment in order to make it break even financially. Express your answer to the nearest 1/1000th of dollars.

Project A requires an immediate investment of​ $8000 and another​ $6000 in three years. Net returns are​ $4000 after two​ years, ​$12,000 after four​ years, and​ $8000 after six years. Project B requires an immediate investment of​ $4000, another​ $6000 after two​ years, and​ $4000 after four years. Net returns are​ $3400 per year for seven years. Determine the net present value at​ 10%. Which project is preferable according to the net present value​ criterion?

# 3 QUESTION 10 Suppose the MARR is 5%. Use the following table to answer the question-Which option should be selected as the base alternative? Initial Investment Annual Revenue Useful Life (Years) E D $ 4 R CMS A. Neither option is acceptable as a base alternative. OB. Both options are acceptable base alternatives. OC. FMS OD. I'm completely lost! E. CMS F Click Save and Submit to save and submit. Click Save All Answers to save all answers. 888 74 $31,000 $38,000 6,866 % FMS 5 T 9,201 G 6 MacBook FO H & 7 F7 U +00 8 J 9 K Save All Answers P 7.

Permian Partners (PP) produces from aging oll fields in west Texas. Production is 1.86 million barrels per year in 2018, but production is declining at 8% per year for the foreseeable future. Costs of production, transportation, and administration add up to $25.60 per barrel. The average ol price was $65.60 per barrel in 2018. PP has 76 million shares outstanding. The cost of capital is 10%. All of PP's net income is distributed as dividends. For simplicity. assume that the company will stay in business forever and that costs per barrel are constant at $25.60. Also, ignore taxes. a. Assume that oll prices are expected to fall to $60.60 per barrel in 2019, $55.60 per barrel in 2020, and $50.60 per barrel in 2021. After 2021, assume a long-term trend of oll-price increases at 6% per year. What is the ending 2018 value of one PP share? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Share value 2016 b-1. What is PP's EPS/P ratio? (Do not round intermediate…

Question 3.4 (15pts) Consider the following two mutually exclusive projects: a What assumption(s) do you need in order to compare a set of mutually exclusive service projects with unequal service lives? b With the assumption(s) defined in part (a) and using 10%, determine which project should be selected. c If your analysis period (study period) is just 4 years, what would be the salvage value of project 42 at the end of year 4 to make the two alternatives economically indifferent? Question 3.4 (15pts) Consider the following two mutually exclusive projects: Year A1 0 -$1,800 A2 -$3,600 1 -$500 -$ 600 2 -$500 - $600 3 -$500 - $600 4 -$500 - $600 5 $ 500+400 - $600 6 - $600 - $600 $600+1000 7 8 a What assumption(s) do you need in order to compare a set of mutually exclusive service projects with unequal service lives? b With the assumption(s) defined in part (a) and using 10 %, determine which project should be selected. c If your analysis period (study period) is just 4 years, what…

Payback Period and Net Present Value If a project with conventional cash flows has a payback period less than the project’s life, can you definitively state the algebraic sign of the NPV? Why or why not? If you know that the discounted payback period is less than the project’s life, what can you say about the NPV? Explain.   Q

Question(4): A power plant is being considered in the dead sea location. For an initial investment of $130 million, annual net revenues are estimated to be $15 million in years 1-5 and $20 million in years 6-20. Assume no residual market value for the plant. a. What is the simple payback period for the plant?

Consider a palletizer at a bottling plant that has a first cost of $150,000, operating and maintenance costs of $17,500 per year, and an estimated net salvage value of $25,000 at the end of 30 years. Assume an interest rate of 8%. What is the present equivalent cost of the investment if the planning horizon is 30 years? a. $335,000. b. $344,500. c. $360,000. d. $395,500.