Installing low thermal emissivity windows (low-e windows) on buildings can contribute to energy conservation. Installing low-ewindows on a school building is estimated to cost $10,000. The windows are expected to last 6 years and have no salvage value at thattime. The energy savings from the windows are expected to be $2,525 in the 1st year. After the 1st year, the savings are expected toincrease by $125 each year due to escalating fossil fuel costs. MARR is 15% per year and annual worth is the preferred measure ofeconomic worth. Which Excel® entry should you use to determine the annual worth of installing the low-e windows?-NPV (15 %,6,10000)+NPV( 15%,6,- NPV ( 15%,2525,25252525,2525,25252525))O-PMT( 15%,6,10000) + PMT( 15 %,6,- NPV ( 15%, 0,125,2 125,3 125,4 125,5*125))+2525O-PMT(15,6,10000)+PMT(15,6,PMT(15,0,125,2 125,3 125,4*125,5*125))+2525-PMT(15%.6.10000)+PMT (15% , 6 , NPV ( 15%, 2525,2 2525,2525,2525,2525))

The annual worth of the given cash flows which can be expected by an investor from the investment is…

Answered: Installing low thermal emissivity…

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

See similar textbooks

Similar questions

The School District is considering the purchase of two school buses. At present, school children are transported to and from the schools in the area using private bus drivers. The new school buses will cost US$54,530 and will have a useful life of 11 years. They will have negligible scrap value, which can be ignored. The new school buses would be more cost-effective, resulting in labor savings of $10,000 per year. What are the Factor of the Internal Rate of Return, and the discount factor (%) that will give a Net Present Value of 0?
Solve the following show solutions
Robert Trails Senior Living Community is considering investing in solar panels to save on utility costs. The initial cost of the panels, including installation, is $241,000. The expected reduction in utility costs are noted below. Utility costs savings for the next five years are: (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Click here to view factor tables Year 1: Year 2: Year 3: Year 4: Year 5: $66,000 $68,100 $72,900 $76,200 $78,700 The current interest rate used to evaluate investment decisions is 6%. The inflation rate is expected to remain constant at 3% for the entire period. (a) * Your answer is incorrect. Compute the present value of the expected cash flows (savings). Present Value of Expected Cash Flows $ 303248
Street lighting fixtures and their sodium vapor bulbs for a two-block area of a large city need to be installed at a first cost (investment cost) of $100,000. Annual maintenance expenses are expected to be $6,650 for the first 9 years and $9,500 each year thereafter upto 30 years. With an interest rate of 8% per year, what is the present worth cost of this project? Choose the closest answer below OA. The present worth cost of the project is $236,701. OB. The present worth cost of the project is $248,491. OC. The present worth cost of the project is $189,145 OD. The present worth cost of the project is $281,813 27
10. Triple Crown is considering installing a new cooler (equipment) in order to increase the volume and variety of beverages they can offer. The new cooler will cost $26,000. It is expected to last 7 years but only if the cooler is overhauled (REPAIRED) at a cost of $4,000 at the end of year 4. The new cooler is expected to have a $2,000 salvage value at the end of 7 years. The new cooler is expected to generate additional revenues of $15,000 per year with an increase in expenses of $9,000 per year. Triple Crown's discount rate is 12%. What is the net present value of this investment opportunity? Should they invest in the cooler? Hint: determine the PV of each item. Be careful if the item is an annuity (anmual) or one time only event. PV of an annuity of S1 PV of S1 Time 10% 12% 14% Time 10% 12% 14% period 1 period 0.909 0.893 0.877 1 0.909 0.893 0.877 1.736 1.690 1.647 2 0.826 0.797 0.769 3 2.487 2.402 2.322 3 0.751 0.712 0.675 4 3.170 3.037 2.914 4 0.683 0.636 0.592 5 3.791 3.605…
An airline is considering a project of replacement and upgrading of machinery that would improve efficiency. The new machinery costs $500 today and is expected to last for 5 years with no salvage value. Straight line depreciation will be used. Project inflows connected with the new machinery will begin in one year and are expected to be $300 each year for 5 consecutive years and project outflows will also begin in one year and are expected to be $150.00 each year for 5 consecutive years. The corporate tax rate is 30% and the required rate of retum is 7% Calculate the project's net present value. Place your answer in dollars and cents. Do not include a dollar sign or comma in your answer. Work your analysis with at least four decimal places of accuracy YOU ARE NOT FINISHED. NOW GO ON TO THE SECOND PARTI PART 2. Given your estimate of the NPV, should you accept or reject the project? Type the word "accept" if you believe you should go ahead with the project of the word "reject" if you…
Liwayway High School is planning to install solar panels to provide some of the electricity for its groundwater desalting facilty. The project would be done in two phases. The first phase will cost P400 million in year 1 and P500 million in year 2. This investment will result in energy savings (phase 2) of P54,000,000 in year 3, P54,600,000 in year 4, and amounts increasing by P600,000 each year through year 10. Let i = 10% per year.(a) What is the future worth of the savings?(b) Is the cost of the solar project justified by the savings? (Hint: Calculate the difference between savings and cost).
Tower City aims to construct a new bypass between two main routes that will reduce commuter travel time. The route will cost $15 million and will save 17,500 people $100 per year in petrol costs. The path will be paved. Every year, at a cost of $7,500, the surface must be refinished. The road will be in use for the next 20 years. Determine if Tower City should construct the road. Money has an interest rate of 8%(ε = interest rate) Note: Show final answer in two decimal places and show complete solution e. The simple payback period is on Year Blank 5 f. The discounted payback period is on Year Blank 6
An electric utility is considering a photovoltaic (PV) solar panel system to provide power to water conditioning pumps within the power plant. The project will be done in two phases. Phase 1 has an initial cost of $3 million. Phase 2 will cost $2.2 million at the beginning of year 3. The system will be put into service at the beginning of year 4. The annual savings using the PV panels is estimated to be $900,000, increasing by $120,000 per year through year 10. The utility’s Minimum Attractive Rate of Return (MARR) is 10%. 1. Determine if the cost of the PV system is justified. (Hint: Consider comparing the present worth of the costs and present worth of the savings.) 2. What is the actual rate of return for this project?
Happy Trails Senior Living Community is considering investing in solar panels to save on utility costs. The initial cost of the panels, including installation, is $250,000. The expected reduction in utility costs are noted below. Utility costs savings for the next five years are: Year 1: $65,000 Year 2: $68,250 Year 3: $71,663 Year 4: $75,246 Year 5: $79,008 The current interest rate used to evaluate investment decisions is 6%. The inflation rate is expected to remain constant at 3% for the entire period. Instructions (a) Compute the present value of the expected cash flows (savings). (b) Should Happy Trails move forward with the investment?
You own a coal mining company and are considering opening a new mine. The mine will cost $117.1 million to open. If this money is spent immediately, the mine will generate $21.5 million for the next 10 years. After that, the coal will run out and the site must be cleaned and maintained at environmental standards. The cleaning and maintenance are expected to cost $1.9 million per year in perpetuity. What does the IRR rule say about whether you should accept this opportunity? If the cost of capital is 8.1%, what does the NPV rule say? Use the graph below to determine the IRR(s) in the problem. NPV ($ millions) 31- 21- NPV of the Investment in the Coal Mine 5 10 15 20 Discount Rate (%) What does the IRR rule say about whether you should accept this opportunity? (Select the best choice below.) A. Accept the opportunity because the IRR is greater than the cost of capital. O B. The IRR is r= 11.83%, so accept the opportunity. O C. Reject the opportunity because the IRR is lower than the 8.1%…

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS