An investment of P100,000 is expected to yield a regular annual net income of P25,000 per year for 10 years. Determine the conventional benefit cost ratio using present worth with an interest rate of 10%?
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- A piece of new equipment has been proposed by engineers to increase the productivity of a certain manual welding operation. The investment cost is $10,000, and the equipment will have a market value of $1,500 at the end of a study period of five years. Increased productivity attributable to the equipment will amount to $5,000 per year after extra operating costs have been subtracted from the revenue generated by the additional production. Suppose that ε = MARR = 25% per year. What are the alternatives external rate of return, and is the alternative acceptable?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?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.
- An investment with a first cost of $265,000 leads to annual benefits of $51,000 over a period of ten years. Determine the benefit cost ratio for this investment assuming an interest rate of 10% per year and no salvage value.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.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.
- eBook Net Present Value Method—Annuity Take a Load Off Hotels is considering the construction of a new hotel for $12,000,000. The expected life of the hotel is 6 years with no residual value. The hotel is expected to earn revenues of $12,400,000 per year. Total expenses, including straight-line depreciation, are expected to be $10,000,000 per year. Take a Load Off's management has set a minimum acceptable rate of return of 12%. a. Determine the equal annual net cash flows from operating the hotel.$fill in the blank 1 b. Calculate the net present value of the new hotel, using the present value factor of an annuity of $1 table below. If required, round to the nearest dollar. If the net present value is negative, enter the amount using a minus sign. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791…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 end of a study period of five years. Increased productivity attributable to the equipment will amount to $8,000 per year after extra operating costs have been subtracted from the revenue generated by the additional production. A cash-flow diagram for this investment opportunity is given below. If the firm’s MARR is 20% per year, is this proposal a sound one? Use the PW method.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?
- The Capitalized cost of a piece of eqpt was found to be P1.5M. The rate of interest was 12% with salvage value of P100k at the end of 10 years. Assuming that the cost of perpetual replacement remains constant, determine the original cost of the eqpt. a. P1,049,237.469 b. P1,490,237.469 c. P1,020,259.877 d. P2,049,237.469An investment of 15,000,000 yields net annual revenues of 11,500,000. What is the simple payback period?A new municipal refuse-collection truck can be purchased for $84,000. Its expected useful life is six years, at which time its market value will be zero. Annual receipts less expenses will be approximately $18,000 per year over the six-year study period. At MARR of 19%, calculate the internal rate of return of the project a. 7% b. 8% c. 9% d. none of the above