An engineer launches a project in the country's top techohub. This involves rental of a computer unit for online class students. He felt that because of the density of students in the area, 90% of his 30-units will be occupied per sem (5 months each) per year. He desires a rate of return of 20%. Other pertinent data are the following: Office investment - 1,000,000 Computer investment per unit - 35,000 Cost of computer after 10 years - 5,000 Office rental per month - 9,000 Computer rental per unit per month - 2,000 Annual maintenance budget per unit - 5,000 Business tax - 1% of the total investment Insurance - 0.5% of total investment Assess the project using (1) ROR, (2) Present Worth Method, and (3) Future Worth Method. (4) Estimate the payback period of this project.
An engineer launches a project in the country's top techohub. This involves rental of a computer unit for online class students. He felt that because of the density of students in the area, 90% of his 30-units will be occupied per sem (5 months each) per year. He desires a rate of return of 20%. Other pertinent data are the following: Office investment - 1,000,000 Computer investment per unit - 35,000 Cost of computer after 10 years - 5,000 Office rental per month - 9,000 Computer rental per unit per month - 2,000 Annual maintenance budget per unit - 5,000 Business tax - 1% of the total investment Insurance - 0.5% of total investment Assess the project using (1) ROR, (2) Present Worth Method, and (3) Future Worth Method. (4) Estimate the payback period of this project.
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 19P
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An engineer launches a project in the country's top techohub. This involves rental of a computer unit for online class students. He felt that because of the density of students in the area, 90% of his 30-units will be occupied per sem (5 months each) per year. He desires a rate of return of 20%. Other pertinent data are the following:
Office investment - 1,000,000
Computer investment per unit - 35,000
Cost of computer after 10 years - 5,000
Office rental per month - 9,000
Computer rental per unit per month - 2,000
Annual maintenance budget per unit - 5,000
Business tax - 1% of the total investment
Insurance - 0.5% of total investment
Assess the project using (1) ROR, (2) Present Worth Method, and (3) Future Worth Method. (4) Estimate the payback period of this project.
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