HW7_Solution_13_Mar_24_Marking_Comments

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University of Alberta *

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352

Subject

Finance

Date

Apr 3, 2024

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xlsx

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29

Uploaded by OmerSenait

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Discount rate: 7.00% Time Capital cost Operating cost 0 $ 900,000.00 1 $ 65,000.00 2 $ 65,000.00 3 $ 65,000.00 4 $ 65,000.00 5 $ 65,000.00 6 $ 65,000.00 7 $ 65,000.00 8 $ 65,000.00 9 $ 65,000.00 10 $ 65,000.00 11 $ 65,000.00 12 $ 65,000.00 13 $ 65,000.00 14 $ 65,000.00 15 $ 65,000.00 16 $ 65,000.00 17 $ 65,000.00 18 $ 65,000.00 19 $ 65,000.00 20 $ 65,000.00 NPV: $ 1,588,610.93 Time Annualized equivalent 0 1 $ 149,953.63 2 $ 149,953.63 3 $ 149,953.63 4 $ 149,953.63 5 $ 149,953.63 6 $ 149,953.63 7 $ 149,953.63 8 $ 149,953.63 9 $ 149,953.63 10 $ 149,953.63 11 $ 149,953.63 12 $ 149,953.63 13 $ 149,953.63 14 $ 149,953.63 15 $ 149,953.63 16 $ 149,953.63
17 $ 149,953.63 18 $ 149,953.63 19 $ 149,953.63 20 $ 149,953.63 NPV: $1,588,610.93
$ 2,200,000.00 $ 110,000.00 Question 1 Net present value $ 1,588,610.93 Annualized capital and operating cost $ 149,953.63 Using function PMT: $149,953.63 Q1 - Annualized Equivalent Costs (4 points): -2 points for correct NPV -2 points for correct or consistent Annualized Cap & Op cost Note: The PMT function returns negative numbers by default. That is why we used "-B16" in the formula
Name High Level 1 5 Intersection 2 2 Fort McMurray 3 95 Peace River 4 11 High Prairie 5 8 Gift Lake 6 2 Grande Prairie 7 65 Slave Lake 8 6 Valleyview 9 4 Lac La Biche 10 11 Swan Hills 11 2 Bonnyville 12 25 Whitecourt 13 5 Westlock 14 12 Gibbons 15 13 Vegreville 16 18 Edson 17 9 Drayton Valley 18 8 Spruce Grove 19 46 Edmonton 20 1365 Hinton 21 13 Viking 22 4 Lloydminster 23 20 Wainwright 24 11 Intersection 25 0 Red Deer 26 159 Killam 27 6 Camrose 28 26 Rocky Mountain House 29 13 Stettler 30 8 Coronation 31 2 Provost 32 6 Intersection 33 2 Three Hills 34 7 Innisfail 35 20 Drumheller 36 8 Youngstown 37 0 Empress 39 2 Oyen 40 3 Calgary 41 1598 Strathmore 42 12 Vulcan 43 6 Brooks 44 14 Node number Market size (population in thousands)
Medicine Hat 45 69 Taber 46 14 Lethbridge 47 128 Crowsnest Pass 48 7 Pincher Creek 49 11 Intersection 50 2 Milk River 51 2 Cardston 52 8
Name Demand High Level 1 5 10 2 Intersection 2 2 4 Fort McMurray 3 95 190 Peace River 4 11 22 High Prairie 5 8 16 Gift Lake 6 2 4 Grande Prairie 7 65 130 Slave Lake 8 6 12 Valleyview 9 4 8 Lac La Biche 10 11 22 Swan Hills 11 2 4 Bonnyville 12 25 50 Whitecourt 13 5 10 Westlock 14 12 24 Gibbons 15 13 26 Vegreville 16 18 36 Edson 17 9 18 Drayton Valley 18 8 16 Spruce Grove 19 46 92 Edmonton 20 1365 2730 Hinton 21 13 26 Viking 22 4 8 Lloydminster 23 20 40 Wainwright 24 11 22 Intersection 25 0 0 Red Deer 26 159 318 Killam 27 6 12 Camrose 28 26 52 Rocky Mountain House 29 13 26 Stettler 30 8 16 Coronation 31 2 4 Provost 32 6 12 Intersection 33 2 4 Three Hills 34 7 14 Innisfail 35 20 40 Drumheller 36 8 16 Youngstown 37 0 0 Empress 39 2 4 Oyen 40 3 6 Calgary 41 1598 3196 Strathmore 42 12 24 Vulcan 43 6 12 Brooks 44 14 28 Node number Market size (population in thousands) Demand per capita:
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