a)A new manufacturing unit will cost $1M to design and build at the beginning of the...
a)A new manufacturing unit will cost $1M to design and build at the beginning of the first year and $100K per year in maintenance costs, including the first year. The unit processes a stable commodity product, so the life of the project is considered infinite. The firm's opportunity cost of capital (i) is 10% per year. What is the capitalized equivalent cost?
b) A company wants to upgrade a material movement system in a factory an option with the following was proposed: The initial cost is $18,000. The equipment life is longer than the project service life, so the expected salvage value at the end of 10 years is $6,000. The annual O&M (operating and maintenance) costs is expected to be $13,000. What is the present worth of this project @ 12%?
Homework Answers
Ans A)
Capitalized Cost= Initial Cost+ Present Value of Annual M&O cost
=1000000+100000/r
=1000000+100000/0.1
=$2000000
Ans B)
Present Worth of project = -(Initial Cost+present worth of annual cost)+present worth salvage Value
=-(18000+13000(P/A,12%,10))+6000(P/F,12%,10)
=-(18000+13000*5.650)+6000*0.3220
=-$89518
Present Worth of project @12% is -$89518
Add Answer to:
a)A new manufacturing unit will cost $1M to design and build at
the beginning of the...
Problem 1 - The construction of a small plant will cost $1M at time 0, $500K...
Problem 1 - The construction of a small plant will cost $1M at time 0, $500K in year 1, $500K in year 2. It will be completed at the end of year 2. Beginning in year 3, maintenance costs will be $10K per year through year 10. From years 11 on, maintenance costs will be $15K per year forever. a) Draw the Cash Flow Diagram for this construction plan. b) Based on 10% interest, what is the capitalized cost for...
A new manufacturing plant costs $5,500,000 to build. Operating and maintenance costs are estimated to be...
A new manufacturing plant costs $5,500,000 to build. Operating and maintenance costs are estimated to be $41,000 per year, and a salvage value of 25% of the initial cost is expected. The units the plant produces are sold for $40 each. Sales and production are designed to run 365 days per year. The planning horizon is 10 years. Find the break-even value for the number of units sold per day for each of the following values of MARR: 5% 10%...
A new bridge with an infinite life is expected to have a first cost of $...
A new bridge with an infinite life is expected to have a first cost of $ 55 million. It will have a maintenance cost of $ 103,323.5 per year. An interest rate of 10% per year, its AW is: ....................$ million (round to Two Decimal)
Odense Counsel has received a proposal to build a new multipurpose outdoor sports stadium. The expected...
Odense Counsel has received a proposal to build a new multipurpose outdoor sports stadium. The expected life of the stadium is 20 years and there will be no cost or no value after this. It will be financed with a 20-year loan (8 percent interest rate annually/cost of capital). The stadium's primary tenant will be Odense's football team (OB). In the project proposal, it is anticipated that the site will also be used for rock concerts and college and high...
the benefits are also per year The city of Ottawa is considering to build a new...
the
benefits are also per year
The city of Ottawa is considering to build a new toll highway that spans from Orleans to Kanata, the project cost is estimated to be $90,000,000 and is to be paid in 3 equal payments (Payment 1 before commencement, Payment 2 at the end of the 1t year and Payment 3 at the end of 2nd year when the construction is done). The feasibility assessment of this project is 25 years after construction. This...
The Capitalized cost (CC) of the project is The property appraisal district for Marin County has...
The Capitalized cost (CC) of the project is
The property appraisal district for Marin County has just installed new software to track residential market values for property tax computations. The manager wants to know the total equivalent cost of all future costs incurred when the three county judges agreed to purchase the software system. If the new system will be used for the indefinite future, find the equivalent value (a) now and (b) for each year hereafter. The system has...
Maintenance money for a new building has been sought. Mr. Price would like to make a...
Maintenance money for a new building has been sought. Mr. Price would like to make a donation to cover all future expected maintenance costs for the new building. These maintenance costs are expected to be 50,000 for the first increasing by 2000 per year for the first 10 years, 70000 for the 11th year increasing by 3% per year for the following 20 years and 130000 each year after that. There is also an additional overhauling cost of 200000 for...
A proposed airport terminal is expected to cost $16,000,000 with a life of 40 years. See...
A proposed airport terminal is expected to cost $16,000,000 with a life of 40 years. See Figure 3. The operating and maintenance costs are estimated as follows. • Operations begin at $1,000,000/year rising $50,000/year/year • Maintenance begin at $500,000/year rising 10% per year • Rehabilitation at the end of every 10 years $2,000,000 All costs of the terminal, including construction, will be financed at 6% and will be repaid by charging each passenger an "airport" fee. (a) Assuming 1,000,000 passengers...
The city of Ottawa is considering to build a new toll highway that spans from Orleans...
The city of Ottawa is considering to build a new toll highway that spans from Orleans to Kanata, the project cost is estimated to be $90,000,000 and is to be paid in 3 equal payments (Payment 1 before commencement, Payment 2 at the end of the 1st year and Payment 3 at the end of 2nd year when the construction is done). The feasibility assessment of this project is 25 years after construction. This highway benefits the city a total...
A major city in Eastern Canada is planning to build a new wastewater treatment plant to...
A major city in Eastern Canada is planning to build a new wastewater treatment plant to accommodate the increasing water consumption of the city, Plant construction will start in 2018 and is going to take five years at a cost of $30 million per year. After construction is completed, the cost of operation, maintenance is expected to be $2 million for the first year, and to increase by 1% per year thereafter. The salvage/scrap value of the wastewater treatment plant...
Problem 1 - The construction of a small plant will cost $1M at time 0, $500K in year 1, $500K in year 2. It will be completed at the end of year 2. Beginning in year 3, maintenance costs will be $10K per year through year 10. From years 11 on, maintenance costs will be $15K per year forever. a) Draw the Cash Flow Diagram for this construction plan. b) Based on 10% interest, what is the capitalized cost for...
Odense Counsel has received a proposal to build a new multipurpose outdoor sports stadium. The expected life of the stadium is 20 years and there will be no cost or no value after this. It will be financed with a 20-year loan (8 percent interest rate annually/cost of capital). The stadium's primary tenant will be Odense's football team (OB). In the project proposal, it is anticipated that the site will also be used for rock concerts and college and high...
the
benefits are also per year
The city of Ottawa is considering to build a new toll highway that spans from Orleans to Kanata, the project cost is estimated to be $90,000,000 and is to be paid in 3 equal payments (Payment 1 before commencement, Payment 2 at the end of the 1t year and Payment 3 at the end of 2nd year when the construction is done). The feasibility assessment of this project is 25 years after construction. This...
The Capitalized cost (CC) of the project is
The property appraisal district for Marin County has just installed new software to track residential market values for property tax computations. The manager wants to know the total equivalent cost of all future costs incurred when the three county judges agreed to purchase the software system. If the new system will be used for the indefinite future, find the equivalent value (a) now and (b) for each year hereafter. The system has...
A proposed airport terminal is expected to cost $16,000,000 with a life of 40 years. See Figure 3. The operating and maintenance costs are estimated as follows. • Operations begin at $1,000,000/year rising $50,000/year/year • Maintenance begin at $500,000/year rising 10% per year • Rehabilitation at the end of every 10 years $2,000,000 All costs of the terminal, including construction, will be financed at 6% and will be repaid by charging each passenger an "airport" fee. (a) Assuming 1,000,000 passengers...
The city of Ottawa is considering to build a new toll highway that spans from Orleans to Kanata, the project cost is estimated to be $90,000,000 and is to be paid in 3 equal payments (Payment 1 before commencement, Payment 2 at the end of the 1st year and Payment 3 at the end of 2nd year when the construction is done). The feasibility assessment of this project is 25 years after construction. This highway benefits the city a total...
A major city in Eastern Canada is planning to build a new wastewater treatment plant to accommodate the increasing water consumption of the city, Plant construction will start in 2018 and is going to take five years at a cost of $30 million per year. After construction is completed, the cost of operation, maintenance is expected to be $2 million for the first year, and to increase by 1% per year thereafter. The salvage/scrap value of the wastewater treatment plant...
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