Q: reatment plant is to be constructed in Washington County. The initial installation will cost $40…
A: Capitalised cost = All Costs incidental to asset + Present value of future cost which is incurred in…
Q: The Transportation Service Directorate of a Municipality wants to purchase a new software system to…
A: Capitalization cost means total cost incurred in the project or investment. Some part of the cost…
Q: r pipeline system is installed in an industrial site that requires ₱12,500,000 initial investment.…
A: Capitalized cost of project are present value of all cost that would occur in future over the period…
Q: A company is considering constructing a plant to manufacture a proposed new product. The land costs…
A: Land cost = $295,000 Buiding Cost = $590,000 Equipment cost = $250,000 Additional working capital =…
Q: To promote sports in Qatar, the National Olympic committee is planning to construct a new handball…
A: Benefit to Cost ratio: It is an indicator that is utilized in cost–benefit analysis to show the…
Q: A municipality is planning on constructing a water treatment plant at an initial cost of…
A: Capital cost is the cost which is required to purchase an equipment. It also includes the repair…
Q: Lincoln Park Zoo in Chicago is considering a renovation that will improve some physical facilities…
A: Working note:
Q: A project of providing electric scooters in an area has an initial cost of $400,000. The e- scooter…
A: Cash flow diagram is pictorial representation of cash inflows and outflows of a project.
Q: A new municipal refuse-collection truck can be purchased for $84,000. Its expected useful life is…
A: The question is related to Capital Budgeting. The details are given. Since the tax rate is not given…
Q: Nike is constructing a mall near industrial estate. The initial investment includes land costs…
A: In this problem we have calculate present value of cash flow and salvage value and compare with…
Q: An Army Corps of Engineers project for improving navigation on the Ohio River will have an initial…
A: Present value is the current value of the money that is expected to be received from the investment…
Q: A printed circuit board manufacturer will construct a new plant. The potential sites have the…
A:
Q: The Camino Real Landfill was required to install a plastic liner to prevent leachate from migrating…
A: Computation:
Q: To reduce flood damage in a river valley in Southern Luzon, a flood control dam is being proposed…
A:
Q: Briggs Excavation Company is planning an investment of $688,600 for a bulldozer. The bulldozer is…
A:
Q: A bulk-water supplier has been awarded by a city to supply their potable water for the next 10…
A:
Q: A city has decided to build a sofiball complex, and the city council has already voted to fund the…
A: Computation: Assume the ticket price is ‘a’.
Q: SAP Inc. received a $1.5 million grant under its Small Business Innovation program. SAP invested the…
A: Data given: Investment = $1.5 million = $15,00,000 Revenue = $400,000 x 4 = $16,00,000 Cost of…
Q: A city government is considering two types oftown-dump sanitary systems. Design A requires aninitial…
A: The relation between the relative cost and benefits of the various investment proposals are analyzed…
Q: The National Park Service is considering two plans for rejuvenating the forest and landscape of a…
A: The current worth method will take into usage of the Present value factors and the concept of Time…
Q: Nike is constructing a mall near industrial estate. The initial investment includes land costs…
A: The annual worth method is the equivalent uniform annual cash flow of a project including all the…
Q: The Greentree Lumber Company is attempting to evaluate the profitability of adding another cutting…
A: NPV means PV of net benefits arises from the project in the future. It can be computed simply by…
Q: Compute the NPV (at 10 percent cost of capital) and IRR to determine the financial feasibility of…
A: Internal Rate of Return: It is the rate at which the net present value of an investment becomes…
Q: A Food Company is considering a project proposal for a newly formulated food product, AA. The…
A: ROI=ProfitInitial investment×100 NPV=Present value of cash inflows-Present value of cash outflows
Q: An airport expansion that is expected to be used indefinitely is under way at Jackson Hole Metro…
A: Under Perpetual Cost. Land Acquisition Cost = Annual Cost/Interest % 600,000,000= Annual Cost/5%…
Q: A construction firm is considering establishing an engineering computing center. The center will be…
A: Given annual operating and maintenance cost for each workstation is $25,000 MARR = 15% Service life…
Q: A new solid waste treatment plant is to be constructed in Washington County. The initial…
A: The question is based on the concept of Fiancial Accounting.
Q: During the construction of a highway bypass, earth moving equipment costing P400,000 was purchased…
A: The question is based on the concept of Depreciation Accounting.
Q: A company is intending to invest in a capital budgeting project to manufacture a medical testing…
A: Net Present Value of a project helps in determining if the project will be useful or not. It is…
Q: Briggs Excavation Company is planning an investment of $132,000 for a bulldozer. The bulldozer is…
A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…
Q: hich is the most economical plan if the interest rate is 12%
A: Proposal A Initial Cost 2,750,000 Life 40 years Annual Operating cost 5,000 Rate of…
Q: . At the end of the 4-year project, the equipment will be sold for P200,000. The schedule for moving…
A: Original Cost of Asset=$40,000Salvage value=$20,000Life of Asset=4 yearsTotal Production=100,000…
Q: Metropolitan Water Utility is planning to upgrade its SCADA system for controlling well pumps,…
A: Present worth is the present value of cash flows that are expected to occur in the future.
Q: El Paso Water is planning to install wind turbines to provide enhanced evaporation of reverse…
A: Single cell spreadsheet function: Using single spread sheet: Answer: $499,109.98
Q: The survey corps is considering the following plans to provide a certain service required by resent…
A: By resent worth cost method Let WCr be the resent worth cost of Plan R and WCs be the resent cost of…
Q: A new solid waste treatment plant is to be constructed in Washington County. The initial…
A: Given Data: Initial Installation Cost = $35 million After 10 years = Minor repair cost = $12 M After…
Q: A new solid waste treatment plant is to be constructed in Washington County. The initial…
A: Capital investment decisions are taken by the management of the company by making proper evaluations…
Q: The proposed capital project calls for the Manufacturing Department to fully automate a production…
A: Net present value refers to the calculation of the total value of an investment as it indicates…
Q: Jones Excavation Company is planning an investment of $125,000 for a bulldozer. The bulldozer is…
A: Net Present Value(NPV) is difference between PV of inflows and PV of outflows related to investment…
Q: The Johnson Chemical Company has justreceived a special subcontracting job from one of itsclients.…
A: NPV computes the existing value of future benefits by discounting future worth with a stated…
Q: Briggs Excavation Company is planning an investment of $932,100 for a bulldozer. The bulldozer is…
A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…
Q: Officials from the City of Galveston and State of Texas gathered to celebrate the start of a beach…
A: Excel Spreadsheet: Excel Workings:
Q: A toll bridge across the Mississippi River is being considered as a replacement for the current I-40…
A:
Q: Street lighting fixtures and their sodium vapor bulbs for a two-block area of a large city need to…
A: Addition of expenses in Balance Sheet to the cost basis of fixed assets is called Capitalized Cost.…
Q: A company is considering constructing a plant to manufacture a proposed new product. The land costs…
A: First calculate total initial investment as follows: Total initial investment = land cost +…
As part of the rehabilitation of the downtown area of a southern U.S. city, the Parks and
Recreation Department expects to develop the space below several over passes into
basketball, handball, miniature golf, and tennis courts. The estimates are initial cost of
$193,000; life of 20 years and, annual M&O costs of$18,000. The department expects
16,000 people per year to use the facilities an average of 2 hours each. The value of the
recreation has been conservatively set at $1 per hour. At a discount rate of 9% per year,
what is the B/C ratio for the project?
Step by step
Solved in 3 steps
- Gina Ripley, president of Dearing Company, is considering the purchase of a computer-aided manufacturing system. The annual net cash benefits and savings associated with the system are described as follows: The system will cost 9,000,000 and last 10 years. The companys cost of capital is 12 percent. Required: 1. Calculate the payback period for the system. Assume that the company has a policy of only accepting projects with a payback of five years or less. Would the system be acquired? 2. Calculate the NPV and IRR for the project. Should the system be purchasedeven if it does not meet the payback criterion? 3. The project manager reviewed the projected cash flows and pointed out that two items had been missed. First, the system would have a salvage value, net of any tax effects, of 1,000,000 at the end of 10 years. Second, the increased quality and delivery performance would allow the company to increase its market share by 20 percent. This would produce an additional annual net benefit of 300,000. Recalculate the payback period, NPV, and IRR given this new information. (For the IRR computation, initially ignore salvage value.) Does the decision change? Suppose that the salvage value is only half what is projected. Does this make a difference in the outcome? Does salvage value have any real bearing on the companys decision?A proposed bridge on the interstate highway is being considered at the cost of 4 million dollars. It is expected that the bridge will have a life of 30 years. Construction costs will be paid by government agencies. Operation and maintenance costs are estimated to be $250,000 per year. Benefits to the public are estimated to be $900,000 per year. The building of the bridge will result in an estimated cost of $250,000 per year to the general public. The project requires a return of 5%. Determine the benefit/cost (B/C) ratio.Alfred Home Construction is considering the purchase of five dumpsters and the transport truck to store and transfer construction debris from building sites. The entire rig is estimated to have an initial cost of $125,000, a life of 8 years, a $5000 salvage value, an operating cost of $40 per day, and an annual maintenance cost of $2000. Alternatively, Alfred can obtain the same services from the city as needed at each construction site for an initial delivery cost of $125 per dumpster per site and a daily charge of $20 per day per dumpster. An estimated 45 construction sites will need debris storage throughout the average year. If the minimum attractive rate of return is 12% per year, how many days per year must the equipment be required to justify its purchase?
- Alfred Home Construction is considering the purchase of five dumpsters and the transport truck to store and transfer construction debris from building sites. The entire rig is estimated to have an initial cost of $145,000, a life of 8 years, a $13500 salvage value, an operating cost of $40 per day, and an annual maintenance cost of $11000. Alternatively, Alfred can obtain the same services from the city as needed at each construction site for an initial delivery cost of $125 per dumpster per site and a daily charge of $26 per day per dumpster. An estimated 26 construction sites will need debris storage throughout the average year. If the minimum attractive fate of return is 10% per year, how many days per year must the equipment be required to justify its purchase? The number of days per year the equipment must be required is determined to be [The Transportation Service Directorate of a Municipality wants to purchase a newsoftware system to charge and track toll fees. The director wants to know the total capitalized cost ofthe software system. The system has an initial installment cost of 150 000 pbr and an additional cost of50 000 pbr after 10 years. Annual software maintenance cost is 8000 pbr and starts at year five. Inaddition, there is expected to be a recurring major upgrade cost of 15000 pbr every 13 years. Assumethat i=5% per year. If the new system will be used for the indefinite future, draw the cash flowdiagram and find the capitalized cost of the investment.A company is intending to invest in a capital budgeting project to manufacture a medical testing device and has projected the following sales: Year 1 Year 2 Year 3 Year 4 Year 5 50,000 66,400 81,200 68,500 54,500 The installed cost of the new assets will be $18,500,000 which will be depreciated using the 7-year MACRS schedule. The assets will have a salvage value of $3,700,000. Initial NWC requirements are $1,500,000 and additional working capital needs are estimated to be 15% of the projected sales increases for the following year. Total fixed costs are $2,000,000 per year. The medical device has a selling price of $300 per unit and variable production costs are $175. The firm has a marginal tax rate of 35% and a required rate of return of 18%. Analyze this project and give your recommendation as to whether they should invest in it or…
- Alfred Home Construction is considering the purchase of five dumpsters and the transport truck to store and transfer construction debris from building sites. The entire rig is estimated to have an initial cost of $142,500, a life of 8 years, a $8500 salvage value, an operating cost of $40 per day, and an annual maintenance cost of $8000. Alternatively, Alfred can obtain the same services from the city as needed at each construction site for an initial delivery cost of $125 per dumpster per site and a daily charge of $34 per day per dumpster. An estimated 19 construction sites will need debris storage throughout the average year. If the minimum attractive rate of return is 11% per year, how many days per year must the equipment be required to justify its purchase? The number of days per year the equipment must be required is determined to beAn environmental consultant is considering the installation of a water storage tank for a client. The tank is estimated to have an initial cost of $426,000, and annual maintenance costs are estimated to be $6,400 per year. As an alternative, a holding pond can be provided a short distance away at an initial cost of $180,000 for the pond plus $90,000 for pumps and piping. Annual operating and maintenance costs for the pumps and holding pond are estimated to be $17,000. The planning horizon is 20 years, and at that time, neither alternative has any salvage value. Determine the preferred alternative based on a present worth analysis with a MARR of 20%/year.A proposal is being considered to improve an existing road connecting two medium size cities in West Africa to reduce transportation costs. The cost of the project is $1,000,000. Present annual transportation cost for all traffic amounts to $1,270,000 per year and would continue if no improvement is made. After the improvement, annual transportation costs are estimated to be $1,166,000. Assume the life of the project 20 years, and MARR is 12%. Should the project be undertaken? Evaluate this proposal by using the net present value method, benefit/cost method, and internal rate of return method. Assume costs appear at the beginning of each year while benefits at the end of a year.
- You are working on a bid to build two city parks a year for the next three years. This project requires the purchase of $185,000 of equipment that will be depreciated using straight-line depreciation to a zero book value over the 3-year project life. The equipment can be sold at the end of the project for $34,000. You will also need $20,000 in net working capital for the duration of the project. The fixed costs will be $18,000 a year and the variable costs will be $168,000 per park. Your required rate of return is 15 percent and your tax rate is 34 percent. What is the minimal amount you should bid per park? A $128,600 B $154,300 C) $72,500 E $219,900 $189,100An Army Corps of Engineers project for improving navigation on theOhio River will have an initial cost of $6,500,000 and annualmaintenance of $130,000. Benefits for barges and paddle wheel touringboats are estimated at $820,000 per year. The project is assumed to bepermanent and the discount rate is 8% per year. Determine if theCorpsshould proceed with the project.Temporary Housing Services Incorporated (THSI) is considering a project that involves setting up a temporary housing facility in an area recently damaged by a hurricane. THSI will lease space in this facility to various agencies and groups providing relief services to the area. THSI estimates that this project will initially cost $4.87 million to setup and will generate $20 million in revenues during its first and only year in operation (paid in one year). Operating expenses are expected to total $12 million during this year and depreciation expense will be another $3 million. THSI will require no working capital for this investment. THSI's marginal tax rate is 35%. Assume that THSI's cost of capital is 14.6% p.a. Compute the NPV of the temporary housing facility to the nearest dollar