Applegate Industries is planning to expand its production facility in a few years. New plant construction costs are estimated to be $4.50 per square foot. The company invests $850,000 today at 8% interest compounded quarterly. a. How many square feet of new facility could be built after 3 1/2 years? Number of years = Periods per year = Nominal rate = Interest rate per period = Compounding periods = Table factor = Investment = Compound amount = Cost per square foot = Square feet = b. If the company waits 5 years, but construction costs increase to $5.25 per square foot, how many square feet could be built? What do you recommend? Number of years = Compounding periods = Table factor = Compound amount = Cost per square foot = Square feet = Recommendation:
Applegate Industries is planning to expand its production facility in a few years. New plant construction costs are estimated to be $4.50 per square foot. The company invests $850,000 today at 8% interest compounded quarterly. a. How many square feet of new facility could be built after 3 1/2 years? Number of years = Periods per year = Nominal rate = Interest rate per period = Compounding periods = Table factor = Investment = Compound amount = Cost per square foot = Square feet = b. If the company waits 5 years, but construction costs increase to $5.25 per square foot, how many square feet could be built? What do you recommend? Number of years = Compounding periods = Table factor = Compound amount = Cost per square foot = Square feet = Recommendation:
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 40P
Related questions
Question
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Applegate Industries is planning to expand its production facility in a few years. New plant
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construction costs are estimated to be $4.50 per square foot. The company invests
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$850,000 today at 8% interest compounded quarterly.
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a. How many square feet of new facility could be built after 3 1/2 years?
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Number of years =
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Periods per year =
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Nominal rate =
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Interest rate per period =
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Compounding periods =
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Table factor =
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Investment =
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Compound amount =
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Cost per square foot =
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Square feet =
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b. If the company waits 5 years, but construction costs increase to $5.25 per
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square foot, how many square feet could be built? What do you recommend?
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Number of years =
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Compounding periods =
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Table factor =
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Compound amount =
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Cost per square foot =
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Square feet =
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Recommendation:
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