The following table summarizes the financial data for a proposed new asset. The issue is how long the asset should be kept. Assume an interest rate of 12% anddelermine the economic service life of the anset.End of YearN)Investment costO&M CostSalvage value$14,000$3.400$8.000$4600$6.000$5.800$4,00001 yearO2 years3 yearsO Not enough information

Given Information : Year 0 1 2 3 Investment Cost $ (14,000.00) O&M cost $…

The following table summartzes the financial data for a proposed new asset. The issue is how long the anset should be kept. Assume an interest rate of 12% and determine the economic service ife of the asset. End of YearN Investment cost $14,000 Salvage value O&M Cost $3.400 $8.000 $6.000 $4.000 2. $4600 3. $5.800 01 year O2 years 3 yearn Not enough infortnation

The following table summartzes the financial data for a proposed new asset. The issue is how long the anset should be kept. Assume an interest rate of 12% and determine the economic service ife of the asset. End of YearN Investment cost $14,000 Salvage value O&M Cost $3.400 $8.000 $6.000 $4.000 2. $4600 3. $5.800 01 year O2 years 3 yearn Not enough infortnation

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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Similar questions

The following data pertain to an investment proposal: Cost of investment Annual cost savings Estimated salvage value Expected life of investment $45,000 $10,000 $0 5 years 10% Discount rate What is the present value of the proposed investment?
From the given values below, which machine should be selected using (a) Present worth Method and (b) Future worth Method if interest rate is 10% per year? Machine A B Initial Cost (Php) Annual Operating Cost 146,000 15,000 80,000 10,000 3 220,000 10,000 75,000 25,000 Annual Revenue Salvage Value Useful Life (years) 6
The capitalized Čost A of an asset is given by A= Ao t c(t) e-** dt %3D Where A is He onginal investment t is the time in years r3 the anneal interest rate Gn decimal form) compounded Coine ously, and A) is the annual Cast of mantenance Cin dollacs) a) Find the capitalized Cust of an asset for n=5 years when A = $ 140,000 c(t) = $ 12,000 t , T:.04. %3D Cost b) Find the capitalized cosp of an asset forever cit)= $12,000 t, r:.04. Ao = $ 140,000
The following information Company: available for a potential investment for Rose Initial investment P80,000 Net annual cash inflow 20,000 Net present value 36,224 Salvage value 10,000 Useful life 10 yrs. The potential investment's profitability index is A. 2.50 B. 2.85 C. 4.00 D. 1.45
What is the capital recovery (CR) cost of the project? Assume MARR = 6% per year. Cash Flow First cost, S Annual cost, S per year Revenue, S per year Salvage value, S$ Life, years -1,000,000 -10,000 110,000 00
The following information is available for a potential investment for Panda Company: $110000 Initial investment Net annual cash inflow Net present value Salvage value Useful life 20000 O 5.50. O 2.49. O 3.55. O 1.40. 44150 10000 10 years The potential investment's profitability index is
Evaluate the two alternatives A and B and decide the economic justified alternative using: Present worth method , Annual worth method , Future worth method , E.R.R Method I.R.R method , E.R.R.R method M.A.R.R = 15% , the details of alternatives are shown in the table below Alternatives A B Investments $60,000 $75,000 Useful life (years) 10 5 Annual disbursements $25,000 $35,000 Annual revenues $45,000 $60,000 Salvage values $5,000 $10,000
An investor has $10,000 invested in asset (X). His advisor recommend a new asset ( Y) for investment with following rate of returns and probabilities: X -10 5 15 Total -5 0.04 0.05 0.01 0.1 -10 0.05 0.05 0.05 0.15 Y 0 0.02 0.1 0.08 0.2 15 0.04 0.2 0.06 0.3 25 0.05 0.1 0.1 0.25 Total 0.2 0.5 0.3 1 a.) Do you agree with the advisor recommendation to invest in asset Y? Explain. b.) If the investor able to divide his money and put it in a new portfolio: $5,000 (50%) in asset (X) and $5,000 (50%) in asset (Y). Would you recommend the new portfolio? Explain.
PART B.) Decide which of the following alternatives should be selected (if one of them MUST be selected) using an Annual Worth Analysis assuming 12% interest. I want to see AWA and AWB calculated as part of the decision. First Cost, $ Annual Operating Cost, $/year Salvage Value, $ Life, years 50,000 10,000 90,000 4,000 13,000 15,000 6.
Consider the financial data for a project given in the table below. Initial investment Project life Salvage value Annual revenue $70,000 6 years $10,000 $26,000 Annual expenses $7,000 (a) What is i for this project? 18.1 % (Round to one decimal place.) (b) If the annual expense increases at a 7% rate over the previous year's expenses, but the annual income is unchanged, what is the new / - 16 % (Round to one decimal place.) (c) In part (b), at what annual rate will the annual income have to increase to maintain the same i obtained in part (a)? The annual income has to increase at% per year (Round to one decimal place.)
Vaughn Company has the following information about a potential capital investment: Initial investment $ 280,000 Annual cash inflow $ 74,000 6 years 13% Expected life: Cost of capital 1. Calculate the net present value of this project. (Future Value of $1. Present Value of $1. Euture Value Annuity of $1. Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Round the final answer to nearest whole dollar.) Net Present Value
The table bellow shows the cash flow for an engineering project, if the reinvestment rate of return e is 6% per year, the external rate of rate (EER) is : EOY Cash flow $ 13000 14 -2000 5 to 10 8000 Select one: O a 14.3% O b. 17.6% O G 7% O d. 20.1% O e. 10%

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