Peter invests in a public project which needs a $500,000 payment now and a second $900,000...
Peter invests in a public project which needs a $500,000 payment now and a second $900,000 payment 10 years from now. This project is considered with a perpetual life. The effective annual interest rate is 12%. What is the approximate capitalized cost?
A.
$289,800
B.
$786,740
C.
$789,800
D.
$5,585,180
Homework Answers
Present value of cash outflow at year 0 =500,000
Present value of cash flow at year 10
=PV(rate,nper,pmt,fv)
=PV(12%,10,,900000) =289776
Total of capitalized cost =500,000+289,776 =789,776
The answer is C)
$789,800
Add Answer to:
Peter invests in a public project which needs a $500,000 payment
now and a second $900,000...
Calculate the perpetual equivalent annual cost (years 1 to ∞) of $900,000 now and $875,000, 4...
Calculate the perpetual equivalent annual cost (years 1 to ∞) of $900,000 now and $875,000, 4 years from now at an interest rate of 10% per year. The perpetual equivalent annual cost is determined to be $________ .
A firm is considering a project requiring an investment of $900,000. The project would generate annual...
A firm is considering a project requiring an investment of $900,000. The project would generate annual cash flows of $244,250 for the next six years. The company uses the straight-line method of depreciation. A partial table of the present value of an annuity of $1 in arrears is as follows: Year 3% 5% 7% 9% 10% 12% 14% 16% 6 5.41719 5.07569 4.76654 4.48592 4.35526 4.11141 3.88867 3.68474 Which of the following is the approximate internal rate of return for...
The initial cost of an infrastructure development project which is expected to serve residents of...
The initial cost of an infrastructure development project which is expected to serve residents of a city perpetually is 15,000,000. The annual operating cost is 800,000 for the first 10 years and 900,000 on the succeeding years onwards. The renovation cost at the end of every 15 years is 1,800,000. Find out the capitalized cost of the project when 1-8% per year. (please include the cash flow diagram and use proper capitalized cost formulas with neatness and accuracy)
The initial...
7. The bridge 9340 on I-35 in Minnesota collapsed in August 2007 and the state is now considering...
7. The bridge 9340 on I-35 in Minnesota collapsed in August 2007 and the state is now considering installing a better structure that will cos $250 Million now and additional cost of S75 million for additional reinforcement 10-years from now. After this, there will a perpetual resurfacing cost of $15 Milliohm every 10 years. Assuming an interest rate of 6% year compounded quarterly, determine the capitalized cost the state must have to fund this project. Show work
7. The bridge...
(Ignore income taxes in this problem.) Peter wants to buy a computer which he expects to...
(Ignore income taxes in this problem.) Peter wants to buy a computer which he expects to save him $4,000 each year in bookkeeping costs. The computer will last for five years, and at the end of five years it will have no salvage value. If Peter's required rate of return is 9%, what is the maximum price Peter should be willing to pay for the computer now? Click here to view Exhibit 8B-1 and Exhibit 8B-2 to determine the appropriate...
Question 1 (28 marks): (CL01: 50%, CLO2: 50%) For Ouestions. Land 2: Two public projects are...
Question 1 (28 marks): (CL01: 50%, CLO2: 50%) For Ouestions. Land 2: Two public projects are being considered. The first project has a construction cost of SR 2,500,000. The operating cost is SR 40,000 annually and a maintenance is required every 10 years of the amount SR 45,000. The second project has a one-time initial cost of SR 1,700,000 with an annual operating cost of SR 30,000 and required a maintenance cost of SR 40.000 every years. There is an...
1.) Two alternatives are being considered to perform a given job. Both of these alternatives provide...
1.) Two alternatives are being considered to perform a given job. Both of these alternatives provide equal service. The cost data for each alternative are provided in the tables below: Alternative 1 900,000 100,000 Alternative 2 300,000 30,000 Initial Cost Salvage Value Life, years Annual cost of operation and maintenance Required return 15,000 20,000 20 T20 Use a conventional cost comparison and determine: (a) An equivalent annual cost comparison assuming infinite service need. Which one do you choose? Why? (b)...
On January 1, Hemi Corporation issued $500,000 of 15-year, 10% bonds for $586,460 yielding an effective...
On January 1, Hemi Corporation issued $500,000 of 15-year, 10% bonds for $586,460 yielding an effective interest rate(yield to maturity) of 8%. Interest is paid semi-annually on June 30 and December 31/ Required: 1) Show computations to confirm the issue price. 2) Compute an amortization schedule for the 15 years of the bonds' life. 3) Give Journal entries for: (A) bond issuance, (b) semi-annual interest payment on June 30 of the first year, and (c) the semi-annual interest payment on...
3. a. A Pharma company invests S 1000 in a project of which S 800 is...
3. a. A Pharma company invests S 1000 in a project of which S 800 is Equity and $200 is debt. The annual cash flows from the project are $ 146 and the tax rate is 25%. Both the interest and the cost of debt are each 7%, while return on equity is 15%. Calculate the NPV and APV of the project for the company b. Singer Ltd has estimated its total cash requirement to be Rs 2 crore next...
Mimi makes a payment of $3,100 a year on her car. At the end of 10...
Mimi makes a payment of $3,100 a year on her car. At the end of 10 years, she’s paid off her initial $20,000 loan. What was her approximate interest rate? 6.10% 8.88% 7.94% 20.56% 7.73% Eddie plans on retiring in 20 years by purchasing a house on the coast. He estimates he will need $1,500,000 saved at that time and is starting now. What payment would Eddie need to make yearly into a savings account with a tax-rate of 35%...
The initial cost of an infrastructure development project which is expected to serve residents of a city perpetually is 15,000,000. The annual operating cost is 800,000 for the first 10 years and 900,000 on the succeeding years onwards. The renovation cost at the end of every 15 years is 1,800,000. Find out the capitalized cost of the project when 1-8% per year. (please include the cash flow diagram and use proper capitalized cost formulas with neatness and accuracy)
The initial...
7. The bridge 9340 on I-35 in Minnesota collapsed in August 2007 and the state is now considering installing a better structure that will cos $250 Million now and additional cost of S75 million for additional reinforcement 10-years from now. After this, there will a perpetual resurfacing cost of $15 Milliohm every 10 years. Assuming an interest rate of 6% year compounded quarterly, determine the capitalized cost the state must have to fund this project. Show work
7. The bridge...
Question 1 (28 marks): (CL01: 50%, CLO2: 50%) For Ouestions. Land 2: Two public projects are being considered. The first project has a construction cost of SR 2,500,000. The operating cost is SR 40,000 annually and a maintenance is required every 10 years of the amount SR 45,000. The second project has a one-time initial cost of SR 1,700,000 with an annual operating cost of SR 30,000 and required a maintenance cost of SR 40.000 every years. There is an...
1.) Two alternatives are being considered to perform a given job. Both of these alternatives provide equal service. The cost data for each alternative are provided in the tables below: Alternative 1 900,000 100,000 Alternative 2 300,000 30,000 Initial Cost Salvage Value Life, years Annual cost of operation and maintenance Required return 15,000 20,000 20 T20 Use a conventional cost comparison and determine: (a) An equivalent annual cost comparison assuming infinite service need. Which one do you choose? Why? (b)...
3. a. A Pharma company invests S 1000 in a project of which S 800 is Equity and $200 is debt. The annual cash flows from the project are $ 146 and the tax rate is 25%. Both the interest and the cost of debt are each 7%, while return on equity is 15%. Calculate the NPV and APV of the project for the company b. Singer Ltd has estimated its total cash requirement to be Rs 2 crore next...
Most questions answered within 3 hours.
-
Where is the error in this code sequence?
String s1 = "Hello";
String s2 = "ello";...
asked 10 months ago -
Financial data for Joel de Paris, Inc., for last year
follow:
Joel de Paris, Inc.
Balance...
asked 10 months ago -
Consider this reaction:
Al2(SO4)3 (aq)+ BaCl3
(aq) Al2Cl6 (aq)- +
3BaSO4(s) . What is the...
asked 10 months ago -
Suppose that Savneet is considering increasing her
recent random sample from 20 car rentals to 40...
asked 10 months ago -
Trucks arrive at an unloading terminal at an average rate of 120
per hour.
Trucks arrive...
asked 10 months ago -
Why are methanol and ethanol completely soluble in water while
octanol is not very little soluble....
asked 10 months ago -
A facilities manager at a university reads in a research report
that the mean amount of...
asked 10 months ago -
When the CuSO4 is rehydrated by adding water to the anhydrous
compound, is this an endothermic...
asked 10 months ago -
A ray of sunlight is passing from diamond into crown glass; the
angle of incidence is...
asked 10 months ago -
A block of mass 0.249 kg is placed on top of a light, vertical
spring of...
asked 10 months ago -
how do the kidneys compensate in the presences of acidosis
a) trigger hyperventilate
b) reserve acid...
asked 10 months ago -
Question 501 pts
The rental rate of capital to the firm increases. Which of the
following...
asked 10 months ago