The following are the costs for one of the alternatives to construct a new bridge:Construction cost = $2200000M Annual Maintenance cost = $48000Renovation cost = $800000 every 15 yearsBased on an interest rate = 5% per year, what is the capitalized cost of this alternative?MR

We are given the costs of an alternative to construct a new bridge. The initial construction cost…

The following are the costs for one of the alternatives to construct a new bridge: Construction cost = $2200000 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

The following are the costs for one of the alternatives to construct a new bridge: Construction cost = $2200000 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

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: A dam will have a first cost of P250,000,000, an annual maintenance cost of P1,250,000 and minor…

A: A capitalized cost seems to be a cost incurred as a consequence of the acquisition of a fixed asset…

Q: The cost od the project is $2,100,000. It will produce future cash flows of $1,300,000 for 2 years.…

A: The Internal Rate of Return (IRR) of the project, we need to find the discount rate at which the net…

Q: what is the capitalized cost of the machine with an initial cost of 10,000 and an infinite life? the…

A: Capitalized cost is that will continue to occur during the life of equipment.

Q: The construction cost of a permanent water park is $550,000. Annual maintenance and operation costs…

A: Note: As per the policy, we are supposed to solve one question at a time. Kindly repost the other…

Q: 20000 OMR, 70000 OMR, and 10000C ent, what is the NPV of this project?

A: The NPV of the project can be computed as follows :

Q: When evaluating the following project, if the required return is 10 percent, what is its NPV? Year…

A: Capital budgeting: Capital budgeting is a financial technique that is used to evaluate long-term and…

Q: Dhofar Art Gallery is adding to its existing buildings at a cost of 250000 OMR . The gallery expects…

Q: In the equation the original amount for the investment is $840,000. Why in the first step of the…

A: Investment = $840,000 Profit = 1,500,000

Q: The Long-line Machine Company is evaluating a capital expenditure proposal that requires an initial…

A: The Net Present Value (NPV) is calculated by subtracting the initial investment from the present…

Q: Determine the capitalized cost of an alternative that has a first cost of $55,000 an annual…

A: First cost = $ 55000 Annual cost = $ 12000 Cost every 5 years = $ 20,000 Annual interest rate = 11%

Q: What equation gives the capitalized cost at 8% interest of the structure described below? Initial…

A: Before giving equation first we find out the meaning of terms given in question Initial cost:- The…

Q: An investr

A: The given question is off the one time initial payment for aquiring capital asset. We know the…

Q: 2. Project A requires an investment of $5,000 today and pays $3,000 at the end of year 1 and $4,000…

A: NPV means PV of net benefits which will arises from the project in coming years. It is equal to the…

Q: The management of Advanced Alternative Power Inc. is considering two capital investment projects.…

A: Following are the answers to the questions attempted wrongly. Note: It is assumed that the present…

Q: : According to the data given in the table below and to the annual equivalent expenditure method,…

A: The equivalent annual cost method is a method used to analyze projects with different life span and…

Q: A flood control project with a life of 14 years will require an investment of $57.000 and annual…

A: Benefit to cost ratio: It is ratio of present value of the benefits to present value of costs.

Q: Compare the projects below using future worth analysis at I = 12% per year a) What is the Future…

A: The future value (FV) is a financial concept representing the projected worth of an investment or…

Q: An investment proposal calls for $223,130 payment now and a second $259,455 7 years from now. The…

A: The question is based on the concept of Financial Accounting.

Q: Some particulars for a project are as follows. Initial Capital Cost in year 0 ($Mn) Follow-up…

A: The overall cost of an asset across its life cycle, including original capital expenses, maintenance…

Q: Cash flows from a new project are expected to be $4,000, $5,000, and $3,000 over the next 3 years,…

A: To calculate the PI ratio we will use the below formula PI = Present value of cash inflows/Initial…

Q: Lara Technologies is considering a cash outlay of $210,000 for the purchase of land, which it could…

A: Opportunity cost is the value forego by not choosing that option. Opportunity cost is cost incurred…

Q: rate is 6%,

A: Capitalized cost of house = Cost of construction + Present value of maintenance cost

Q: Year 1, $10,000; Year 2, $50,000; and Year 3, $100,000. At an annual interest rate of 3 percent,…

A: Net present value is one of the concept used in capital budgeting. Under this, present value of cash…

Q: Compute the payback statistic for Project B if the appropriate cost of capital is 12 percent and the…

A: Payback period is the period required to recover the initial investment of the project and the…

Q: Please show step by step Net Present Value—Unequal Lives Project 1 requires an original investment…

A: The Net Present Value (NPV) of investment seems to be the sum of all future cash flows discounted to…

Q: ompute the payback statistic for Project A if the appropriate cost of capital is 7 percent and the…

A: Payback period is the amount of time required to recover initial investment Payback period =Initial…

Q: An investment project costs $13,700 and has annual cash flows of $3,500 for six years. a) What is…

A: The discounted payback period is a financial metric that measures the time it takes for an…

Q: 1 Abusiness is considering the option of buying a piece of equipment that has a life of 5 years. The…

A: In accounting the net present value is derived by deducting the present value of associated cash…

Q: Compute the payback statistic for Project A if the appropriate cost of capital is 7 percent and the…

A: Caluclating Discounting Pay Back Period For Project A

Q: Consider a project with costs of $39 million total in 6 years. Assuming that the costs are paid the…

A: Given: Future value (FV) = $39 Million Time period (n) = 6 years Discount rate (r) = 6% = 0.06

Q: ears, with a predicted 0.8 billion RMB/year revenue and operation fee 0.45 billion RMB plus erprise…

A: Straight line method of depreciation is mostly used by accountant even though not so accurate but…

Q: Compute the payback statistic for Project A if the appropriate cost of capital is 8 percent and the…

A: >Please refer to the below spreadsheet for calculation and answer. Cell reference was also…

Q: Find the rate of retum (IRR-Ch16.3) on a project that will cost $400,000 today but will retum a net…

A: solution IRR is the rate of interest at which the Net present value is equal to Zero it means…

Q: The ABC Transportation estimates the cost of upgrading a highway to be $85 million now. Resurfacing…

A: 550000 each 3 years interest rate =8% Future value FACTOR =(1.08)3- 1/0.08 Future value FACTOR…

Q: What is the value of the FW for an alternative which is at an interest rate of 8% per year if first…

A: Future Worth Analysis is the method for determining the future value of present cash flows invested…

Q: calculate the capitalized cost of a project that has an initial cost of 8 000 000 and an additional…

A: Initial Cost= 80,00,000 Additional Cost =250,000 n=8 Operating cost for first 5 years= 150,000…

Q: Compute the payback statistic for Project A if the appropriate cost of capital is 7 percent and the…

A: Calculation of Payback Period:The payback period is 2.48 years.The project should be Accepted since…

Q: A new project will have an intial cost of $100,000. Cash flows from the project are expected to be…

A: Net present value (NPV) is a financial metric used to determine the value of an investment by…

Q: Dhofar Art Gallery is adding to its existing buildings at a cost of 200000 OMR. The gallery expects…

A: Year Cash Flow Discount factor @10% Discounted value 1 20,000 0.90909 18,181.82 2 70,000…

Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

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

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

2. (a) You want to set-up a scholarship fund that will support $20000/year for an infinite period. The fund is expected to earn 8% return per year forever. What initial investment is needed to set-up the scholarship fund? Find the value of (P/A,1/2%, ∞). (b) Estimate the depreciation schedule of a machine with an initial cost of $100,000, useful life of 8 years and a salvage value of $30,000. Use the double declining balance method to develop the depreciation schedule.
A water Reservoir will have a first cost of Php 10,000,000,000, an annual maintenance cost of 35,000,000, and minor reconstruction costs of 3,000,000 every five years. What the capitalized cost of the reservoir at an interest rate of 10% per year?
Compute the payback statistic for Project A if the appropriate cost of capital is 7 percent and the maximum allowable payback period is four years. (Round your answer to 2 decimal places.) Project A Time: 0 1 2 3 4 5 Cash flow: −$1,100 $390 $510 $540 $320 $120 Should the project be accepted or rejected?multiple choice accepted rejected
A certain dam costs P400,000 and will serve the purpose for 20 years. At the end of that time it must be enlarged at a cost of P200,00O. If the dam had been built larger than originally, the cost would have been P500,000. Bonds pay interest at the rate of 5% per annum and the interest paid annually. Compare the two alternatives and calculate the saving or loss. O The first alternative is better O The second alternative is better
An investment proposal calls for $282,061 payment now and a second $140,722 6 years from now. The investment is for a project with a perpetual life. The annual interest rate is 6%. What is the approximate capitalized cost?
The initial price for a stadium is $15,000,000. There will be a 2% adjustment to the price, a 5% discount to the price, and $150,000 of revenue from the sale of previous equipment and land. If the projected future cash flow is $16,000,000. What is the Net Present Value of this project.
The Dry Dock is considering a project with an initial cost of $107,770 and cash inflows for years 1 to 3 of $37,200 $54,600 and $46,900 respectively. What is the IRR?
Please help me with show all calculation thanku
Please help me option should match
what is the NPV of the new construction equipment? Initial cost = $100k, Salvage Value in 6 yrs = $25K, Increase Yearly Net Sales = $25k, Bank Rate = 10%
Calculate the capitalized cost of a project that has an initial cost of P3,000,000 and an additional cost of P100,000 at the end of every 10 years. The annual operating cost will be P100,000 at the end of every year for the first 4 years and P160,000 thereafter. In addition, there is expected to be recurring major rework cost of P300,000 every 13 years. Assume i=15%.
Solve the following problems. Provide proper solutions. 1. Given the information below and 15 percent cost of capital: OUTFLOW Year1: P800,000 Year2: P800,000 Year3: P800,000 Year4: P800,000 Year5: P800,000 P2,500,000 INFLOWS (a) Compute the net present value. (b) Should the project be accepted? Why? -----