1. A passenger train was bought at Php 36000000 and will incur 1500000 of annual operation and maintenance expense in the first 5 and will increase to 2500000 thereafter until it reaches its economic life of 20 years. Find the capitalized cost at i = 5 % yearly if the train will have a salvage value of Php 3000000 and would be replaced by a new one at the end of its economic life with the same maintenance and operating expenses.
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- A firm has the opportunity to invest in a project having an initial outlay of $20,000. Net cash inflows (before depreciation and taxes) are expected to be $5,000 per year for five years. The firm uses the straight-line depreciation method with a zero salvage value and has a (marginal) income tax rate of 40 percent. The firms cost of capital is 12 percent. Compute the IRR and the NPV. Should the firm accept or reject the project?2.5. An electric cooperative is considering the use of a concrete electric pole in the expansion of its power distribution lines. A concrete pole costs P18,000 each end will last 20 years. The company is presently using creosoted wooden poles which cost P12,000 per pole and will last 10 years. If money is worth 12 per cent, which pole should be used. Assume annual taxes amount to 1 per cent of first cost and zero salvage value in both casesCori's Meats is looking at a new sausage system with an installed cost of $495,000. This cost will be depreciated straight-line to zero over the project’s five-year life, at the end of which the sausage system can be scrapped for $73,000. The sausage system will save the firm $175,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $32,000. If the tax rate is 23 percent and the discount rate is 10 percent, what is the NPV of this project?
- A man is considering putting up his own enterprise, where an investment of 800,000 will be required and will take 15 years to recoup. He estimates his annual sales at 800,000 along with the following operating costs. Materials =160,000/ yearLabor = 280,000/ yearOverhead = (40,000 + 10% of sales)/ yearSelling Expense = 60,000/ yearThe man will give up his regular job paying 216,000 Php per year and devote all his time to the operation of his business, this will result in decreasing his labor cost by 40,000 per year, material cost by 28,000 per year and overhead cost by 32,000 per year. If the man expects to earn at least 20% of his capital, should he invest? Solve using a) Rate of return method b) annual worth method c)present worth method d)equivalent uniform annual cost methodA man is considering putting up his own enterprise, where an investment of 800,000Php will be required and will take 15 years to recoup . He estimates his annual sales at 800,000Php along with the following operating costs. Materials ............................. 160,000Php/ yearLabor ............................. 280,000Php/ yearOverhead ............................. (40,000 + 10% of sales) Php/ yearSelling Expense............................. 60,000Php/ yearThe man will give up his regular job paying 216,000 Php per year and devote all his time to the operation of his business, this will result in decreasing his labor cost by 40,000Php per year, material cost by 28,000Php per year and overhead cost by 32,000 Php per year. If the man expects to earn at least 20% of his capital, should he invest? solve in the present worth cost methodAn investment in a new piece of equipment costing P 50,000 is expected to yield the following over its 5-year useful life: Revenues (cash), P 40,000; operating costs (cash), P 18,000; depreciation, P 10,000. The present value of P 1 received annually for 5 years and discounted at the cost of capital is 4.10 assuming that all cash flows occur at year-end. Ignoring tax effect, what is the benefit/cost ratio (profitability index) for this piece of equipment?
- A California utility firm is considering building a 50-megawatt geothermalplant that generates electricity from naturally occurring underground heal. The binary geothermal system will cost $85 million to build and $6 million (including any income-tax effect) to operate per year. (Unlike a conventional fossilfuel plant, this system will require virtually no fuel costs.) The geothermal plant is to last 25 years. At the end of that time, the expected salvage value will be about the same as the cost to remove the plant. The plant will be in operation for 70% (the plant-utilization factor) of the year (or 70% of 8,760 hours per year). If the firm's MARR is 14% per year, determine the cost of generating electricity per kilowatt-hour.At 6%, find the capitalized cost of a bridge whose cost is P250M and life is 20 years, if the bridge must be partially rebuilt at a cost of P100M at the end of each 20 years a.) 265.3 b.) 295.3 c.) 245.3 d.) 254.3#23 * Using NPW to Decide Between Competing Projects: Machine X has an initial cost of $12,000 and annual maintenance of $700 per year. It has a useful life of four years and no salvage value at the end of that time. Machine Y costs $22,000 initially and has no maintenance costs during the first year. Maintenance is $200 at the end of the second year and increases by $200 per year thereafter. Machine Y has a useful life of eight years and an anticipated salvage value of $5,000 at the end of its useful life. If the MARR is 6%, what is the approximate Net Present Worth (NPW) of machine X? A. -$28,563 B. -$25,852 C. -$32,085 D. -$22,318
- Need answers,ASAP 4. a sediment control project in nueva vizcaya requires an initial investment of 145,000, has a salvage value of 22,000 after six years, incurs annual expenses of 10,000, and provides annual revenue of 18,000. using a marr of 10%, determine the aw of this project.Mustang Auto Parts, Inc. is considering one oftwo forklift trucks for its assembly plant.• Truck A costs $15,000 and requires $3,000 annually in operating expenses. It will have a $5,000salvage value at the end of its three-year servicelife.• Truck B costs $20,000, but requires only $2,000annually in operating expenses; its service life isfour years, at which time its expected salvage valuewill be $8,000.The firm’s MARR is 12%. Assuming that the trucksare needed for 12 years and that no significantchanges are expected in the future price and functional capacity of each truck, select the most economical truck on the basis of AE analysis.n Project A Project B 0 -$7,000 -$5,000 1 -$2,500 -$2,000 2 -$2,000 -$2,000 3 -$1,500 -$2,000 4 -$1,500 -$2,000 5 -$1,500 -$2,000 6 -$1,500 -$2,000 7 - -$2,000 8 - - Suppose projects A and B are mutually exclusive. The required service period is 8 years and comparable equipment will be leased for $3,000 per year payable at the end of each year for the remaining years of the required service period. Which project is a better choice at 15%? Use PW(15%) criterion and show your equation with numbers plugged into factors and your numerical result for each option.