A city is spending $20 million on a new sewage system. The expected life of the system is 180 years, and it will have no market value at the end of its life. Operating and maintenance expenses for the system are projected to average $0.6 million per year. If the city's MARR is 8% per year, what is the capitalized worth of the system?
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- A piece of new equipment has been proposed by engineers to increase theproductivity of a certain manual welding operation. The investment cost is$25,000, and the equipment will have a market value of $5,000 at the endof a study period of five years. Increased productivity attributable to theequipment will amount to $8,000 per year after extra operating costs havebeen subtracted from the revenue generated by the additional production.A cash-flow diagram for this investment opportunity is given below. If thefirm’s MARR is 20% per year, is this proposal a sound one? Use the PWmethod.A government has decided to build a bridge. that initial cost is estimated to be 60,000,000. the annual maintenance is estimated to be 4,000,000. every ten years a minor upgrade will be needed costing 20,000,000. every 20 years a major repair and refurbishment will be 40,000,000. If the bridge is expected to last indefinitely and effective I = 6% per year what is the capitalized cost of the bridge?Estimates for a proposed small public facility are as follows: Plan A has a first costof $50,000, a life of 25 years, a $5,000 market value, and annual maintenance expensesof $1,200. Plan B has a first cost of $90,000, a life of 50 years, no market value, andannual maintenance expenses of $6,000 for the first 15 years and $1,000 per year foryears 16 through 50. Let MARR be 10% per year.(a) Find the Net Present Value, and. Net Annual Value for the two alternatives.(b) Which ones are feasible, and which one would you choose if you had to pick oneof the two?
- A project capitalized for P5,000,000 is expected to earn a uniform annual revenue of P1,000,000 in 10 years. The cost of operation and maintenance is P100,000 a year, taxes and insurance will cost 3% of the first cost per year. If the company expects its capital to earn 12% income before taxes, would you recommend investing in the project? Use the PW method. Determine the present worth of income.Determine the present worth of cost.Will it be worthwhile to invest for the apartment?An airline is planning to make iPads® available on some of its Boeing 747 aircrafts with in-flight e-mail and Internet service on transoceanic flights. Passengers on these flights will be able to rent iPads from the airline and use them to browse webs or to send and receive e-mail no matter where they arein the skies. A nominal charge of approximately $30 will be instituted for each rental. The airline has estimated the projected cash flows (in millions of dollars) for the systems in the first 10 aircraft as follows: Determine whether this project can be justified at MARR = 15%, and calculate the annual benefit (or loss) that would be generated after installation of the systems.Parker County Community College (PCCC) is trying to determine whether to use no insulation or to use insulation that is either 1 inch thick or 2 inches thick on its steam pipes. The heat loss from the pipes without insulation is expected to cost $1.50 per year per foot of pipe. A 1-inch thick insulated covering will eliminate 89% of the loss and will cost $0.40 per foot. A 2-inch thick insulated covering will eliminate 92% of the loss and will cost $0.85 per foot. PCCC Physical Plant Services estimates that there are 250,000 feet of steam pipe on campus. The PCCC Accounting Office requires a 10%/year return to justify capital expenditures. The insulation has a life expectancy of 10 years. Determine which insulation (if any) should be purchased using annual worth analysis.
- An industrial park is being planned near a river. The river occasionally floods, and as a result theindustrial park planners are trying to decide how large of an embankment to build as protection. Theembankment is expected to last 50 years. The MARR is 12%. If the water rises above theembankment (regardless how much) and flooding occurs, the cost is $300,000. Using the data below,find the expected annual costs in each case and determine which embankment height should beselected.Embankmentheight(meters)Initial Costof EmbankmentProbability of water rising aboveembankment in any given year2.0 $100,000 0.3302.5 $165,000 0.1253.0 $300,000 0.0403.5 $400,000 0.0204.0 $550,000 0.01 Please attach an actual excel file too.The city of Oak Ridge is considering the construction of a four kilometer (km) greenway walking trail. It will cost $1,000 per km to build the trail and $300 per km per year to maintain it over its 20-year life. If the city’s MARR is 7% per year, what is the equivalent uniform annual cost of this project? Assume the trail has no residual value at the end of 20 years.The required investment cost of a new, large shopping center is $50 million. The salvage value of the project is estimated to be $22 million (the value of the land). Theproject's life is 17 years and the annual operating expenses are estimated to be $18 million. The MARR for such projects is 15% per year. What must the minimum annual revenue be to make the shopping center a worth whileventure?
- The Golden Gate bridge is maintained by 17 ironworkers, who replace corroding steel and rivets, and 38 painters. If the painters have an average wage of $120,000 per year with benefits and the ironworkers get $150,000, what is the capitalized cost today of all the future wages for bridge maintenance at an interest rate of 8% per year?Project A requires an immediate investment of $8000 and another $6000 in three years. Net returns are $4000 after two years, $12,000 after four years, and $8000 after six years. Project B requires an immediate investment of $4000, another $6000 after two years, and $4000 after four years. Net returns are $3400 per year for seven years. Determine the net present value at 10%. Which project is preferable according to the net present value criterion?What is the capitalized cost of a public works project that cost $25 million now and will require $2 million in maintenance annually? The effective annual interest rate is 12%.