A state government is considering construction of a flood control dike having a life span of 15 years. History indicates that a flood occurs every five years and causes $600,000 in damages, on average. If the state uses aMARR of 12% per year and expects every public-works project to have a B–C ratio of at least 1.0, what is the maximum investment that will be allowed for the dike? Assume that the flood occurs in the middle of each five-year period. (a) $1,441,000 (b) $643,000 (c) $843,000 (d) $4,087,000 (e) $1,800,000.

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A: Initial Cost = 1,200,000 Annual Maintenance Cost in perpetuity = 25,000 Interest Rate = 10%

Q: The Public Service Board (PSB) awarded two contracts worth a combined $3.07 million to increase the…

A: Calculation of savings if bids were lower than estimated is shown below: Hence, annual worth of…

Q: an initial cost of $50,000,000.  The annual maintenance is $1,000,000 per year, each and every year…

A: in this we have to calculate present value of both approaches and select best among them.

Q: A village recently completed the construction of a new water tower. The entire cost of the water…

A: The equal payment flow which occurs for a finite period and ends after lapse of finite time period…

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A: Present value of an asset can be calculated by multiplying the future value by the discount factor.…

Q: A city is evaluating the installation of a garbage incinerator on the outskirts of town. The cost of…

A: Note: $25,000 environmental study cost, which is irrelevant for decision making. So, this cost…

Q: The town of Podunk is considering building a new downtown parking lot. The land will cost $25,000,…

A: Given information: Cost of the land is $25,000, Cost of construction of the lot is $150,000 Costs…

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Q: Kartman Corporation is evaluating four different real estate investments. Management plans to buy…

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Q: A new municipal refuse-collection truck can be purchased for $84,000. Its expected useful life is…

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Q: what is the annual capital recovery for the truck?

A: Formula: PV Factor= 11+rn Annuity PV Factor= 1-1+r-nr where, r is rate per periods n is number of…

Q: To reduce flood damage in a river valley in Southern Luzon, a flood control dam is being proposed…

A:

Q: Peachtree Construction Company, a highway contractor, is considering the purchase of a new trench…

A:

Q: At the start of Year 1, the City Peacock leases 30 computers for use by various officials in school…

A: Given: Annual lease payment = $90,000 Period = 5 years Rate = 8%

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A: Discounting is a technique through which present value of future amount is calculated by using…

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A: Present value is the current worth of a cash flow at a certain rate of interest and period of time.…

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A: In this we need to find the present value of all cost required during the life of project.

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A: Hey, since there are multiple questions posted, we will answer first question.

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A: in this we have to calculate net annual savings and net annual cost both must be equal to break…

Q: Find the year-by-year after-tax net cash flow for the project at a 40% marginal tax rate based on…

A:

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A: Given, The cash flow for the first 4 years is $4.1 million The interest rate is 6%.

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A: Need to find the number of years at which present worth of annual payment of $85,000 equals to…

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.