Two methods of carrying away surface runoff water from a new subdivision are being evaluated: METHOD A: Dig a ditch. The initial cost would be P3 million and P1 million of redigging and shaping would be required at five-year intervals forever. METHOD B: Lay concrete pipe, The initial cost would be P7.5 million, and replacement pipe would be required at 50-year intervals at a net cost of P9 million indefinitely. At i = 12%, which method is the better one in terms of having a smaller cost?

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?

Two roadway design are under consideration. Design 1A will cost $3 million to build and $100,000 per year to maintain. Design 1B will cost $3.5 million to build and $40,000 per year to maintain. Both designs are assumed to be permanent. Use an AW based rate of return equation to determine (a) the breakeven ROR, and (b) which design is preferred at a MARR of 10% per year

A five-year project has an initial fixed asset investment of $355,000, an initial NWC investment of $39,000, and an annual OCF of −$38,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required return is 11 percent, what is this project’s equivalent annual cost, or EAC? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

A five - year project has an initial fixed asset investment of $335,000, an initial NWC investment of $35,000, and an annual OCF of -$34,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required return is 10 percent, what is this project's equivalent annual cost, or EAC? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.)

A proposed project requires an investment of $250,000 and will require an additional $60,000 for upgrades in year five. The income from the project is expected to be $65,000 in years one through four and $50,000 in years six through seven. In year five, revenue to be in ye of the $60,000 spent for upgrades). There is not salvage value. If the external reinvestment rate of 8% is available, what is the rate of return for this project using the ERR method? $250,000 $65,000 $65,000 $65,000 $65,000 TITT $60,000 $50,000 $50,000

A project to control flooding from rare, but sometimes heavy, rainfalls in the arid southwest will have the following cash flow estimates. Determine which project should be selected on the basis of a B/C analysis using an interest rate of 8% per year and a 20-year study period.

The investor-developer would not be comfortable with a 7.8 percent return on cost because the margin for error is too risky. If construction costs are higher or rents are lower than anticipated, the project may not be feasible. The asking price of the project is $12,700,000 and the construction cost per unit is $82,200. The current rent to justify the land acqusition is $2.2 per square foot. The weighted average is 900 square feet per unit. Average vacancy and Operating expenses are 5% and 35% of Gross Revenue respectively. Use the following data to rework the calculations in Concept Box 16.2 in order to assess the feasibility of the project:   Required: a. Based on the fact that the project appears to have 9,360 square feet of surface area in excess of zoning requirements, the developer could make an argument to the planning department for an additional 10 units, 250 units in total, or 25 units per acre. What is the percentage return on total cost under the revised proposal? Is the…

You are considering the following project. What is the NPV of the project? WACC of the project: 0.10 Revenue growth rate: 0.05 Tax rate: 0.40 Revenue for year 1: 13,000 Fixed costs for year 1: 3,000 variable costs (% of revenue): 0.30 project life: 3 years Economic life of equipment: 3 years Cost of equipment: 20,000 Salvage value of equipment: 4,000 Initial investment in net working capital: 2,000

answer must be in proper format or i will give down vote