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an initial investment of 1500 thousand dol ollars at the end of each of the next two qua The building company will need to cover ollars at the end of each of the next two qua the construction by the end of the second. illion dollars. Assuming that the annual into

an initial investment of 1500 thousand dol ollars at the end of each of the next two qua The building company will need to cover ollars at the end of each of the next two qua the construction by the end of the second. illion dollars. Assuming that the annual into

College Algebra
College Algebra
1st Edition
ISBN:9781938168383
Author:Jay Abramson
Publisher:Jay Abramson
Chapter7: Systems Of Equations And Inequalities
Section7.2: Systems Of Linear Equations: Three Variables
Problem 64SE: You inherit one hundred thousand dollars. You invest it all in three accounts for one year. The...
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A building company plans to build a new warehouse. The cost of building the warehouse is an initial investment of 1500 thousand dollars, together with a further 250 thousand dollars at the end of each of the next two quarters. The building company will need to cover quarterly operating cost of 120 thousand dollars at the end of each of the next two quarters (first and second). After completion of the construction by the end of the second quarter, the warehouse will be sold for 2.5 million dollars. Assuming that the annual interest rate is 4% compounded annually, find: (1) The present value of the building costs; (2) The present value of the operating costs; (3) The present value of the revenue; and (4) The internal rate of return of the project. (5) Do you think the company should carry out this project? Give your reason(s).
Transcribed Image Text:A building company plans to build a new warehouse. The cost of building the warehouse is an initial investment of 1500 thousand dollars, together with a further 250 thousand dollars at the end of each of the next two quarters. The building company will need to cover quarterly operating cost of 120 thousand dollars at the end of each of the next two quarters (first and second). After completion of the construction by the end of the second quarter, the warehouse will be sold for 2.5 million dollars. Assuming that the annual interest rate is 4% compounded annually, find: (1) The present value of the building costs; (2) The present value of the operating costs; (3) The present value of the revenue; and (4) The internal rate of return of the project. (5) Do you think the company should carry out this project? Give your reason(s).
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