Compare three alternatives on the basis of their capitalized costs at i = 14% per year and select the bestalternative.AlternativeEGFirst CostAOC, per YearSalvage ValueLife, Years$-75,000$-490,000$-990,000$-50,000$-20,000$-9,000$25,000$75,000$750,000200The capitalized cost of alternative E is $alternative F is $and alternative G is $The best alternative is

Capitalized cost is the present worth of the annual cost over the tenure of the project or…

Compare three alternatives on the basis of their capitalized costs at i 14% per year and select the best alternative. Alternative E G First Cost $-75,000 $-490,000 $-990,000 AOC, per Year Salvage Value Life, Years $-50,000 $-20,000 $-9,000 $25,000 $75,000 $750,000 2 4 The capitalized cost of alternative E is $ alternative F is $ and alternative G is $ The best alternative is

Compare three alternatives on the basis of their capitalized costs at i 14% per year and select the best alternative. Alternative E G First Cost $-75,000 $-490,000 $-990,000 AOC, per Year Salvage Value Life, Years $-50,000 $-20,000 $-9,000 $25,000 $75,000 $750,000 2 4 The capitalized cost of alternative E is $ alternative F is $ and alternative G is $ The best alternative is

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 10P: Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year...

See similar textbooks

Similar questions

Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $7,400 per year for 5 years. Calculate the two projects’ NPVs, IRRs, MIRRs, and PIs, assuming a cost of capital of 12%. Which project would be selected, assuming they are mutually exclusive, using each ranking method? Which should actually be selected?
Compare three alternatives on the basis of their capitalized costs at i = 13% per year and select the best alternative. Alternative E F G First Cost $-85,000 $-325,000 $-825,000 AOC, per Year $-65,000 $-20,000 $-6,000 Salvage Value $25,000 $75,000 $500,000 Life, Years 2 4 ∞ The capitalized cost of alternative E is $ , alternative F is $ , and alternative G is $ . The best alternative is E G F .
Compare the alternatives shown on the basis of their capitalized costs using a MARR of 10% per year. Alternative M N First cost, $ −195,000 −750,000 Annual operating cost, $ per year −70,000 −11,000 Salvage value, $ 8,000 1,000,000 Life, years 5 ∞ The capitalized cost for alternative M is $− , and the capitalized cost for alternative N is $− . The best alternative selected on the basis of their capitalized costs is alternative
Compare the alternatives below on the basis of their capitalized costs with adjustments made for inflation. Use i =12% per year and f = 3% per year. Alternative X Y First cost, $ −18,500,000 −9,000,000 AOC, $ per year −25,000 −10,000 Salvage value, $ 105,000 82,000 Life, years ∞ 10
The following information relates to two projects of which you have to select one to invest in.Both projects have an initial cost of $400,000 and only one can be undertaken.Project X YExpected profits $ $Year 1 160,000 60,000Year 2 160,000 100,000Year 3 80,000 180,000Year 4 40,000 240,000Estimated resale value atthe end of year 4 80,000 80,000i) Profit is calculated after deducting straight line depreciationii) The cost of capital is 16%Required:a) For both projects, calculate the following:i) The payback period to one decimal place ii) The accounting rate of return using average investments iii) The net present value iv) Advise the board which project in your opinion should be undertaken, givingreasons for your decision.
Determine the capitalized cost of an alternative that has a first cost of $55,000 an annual maintenance cost of $12,000 and a cost every five years of $20,000. Use an interest rate of 11% per year.
Cooper Company must evaluate two capital expenditure proposals. Cooper’s hurdle rate is 10%. Data for the two proposals follow. Proposal X Proposal Y Required investment $120,000 $120,000 Annual after-tax cash inflows 24,000 After-tax cash inflows at the end of years 3, 6, 9, and 12 72,000 Life of project 12 years 12 years Using net present value analysis, which proposal is the more attractive?Do not use negative signs with your answers. Round PV answers to the nearest whole number. Use rounded answers for subsequent calculation of net present value.
An equipment’s cost is P50,000 with an economic life of 10 years. The equipment can be sold at P5,000 after 10 years. At what price can the equipment be sold after 5 years. (a) Using Straight line Method. (b) Using Sum of the years digit method. (c) Using Double Declining Balance Method (d) Using Declining Balance Method (e) Using Sinking Fund at 5%.Answer: a, b
Find present amount or capitalized cost and A values at i= 5% of long-term public project if Nonrecurring costs: first $150,000; one-time of $50,000 in year 10 Recurring costs: annual maintenance of $8000 (years 1-6) and $9000 thereafter; Upgrade costs $15,000 each 15 years Also draw a cash flow diagram
You are evaluating three mutually exclusive public-works projects with the respective costs and benefits included in the table below. The useful life of each of the projects is 30 years and MARR is 12% annually. Should any of the projects be selected? (Hint: use incremental B-C Analysis) A B C Capital Investment $10,500,000 $12,000,000 $14,000,000 Annual Operating and Maintenance Costs $850,000 $925,000 $930,000 Market Value $1,350,000 $1,950,000 $2,100,000 Annual Benefit $2,250,000 $2,565,000 $2,700,000
Draper Consulting must evaluate two capital expenditure proposals. Draper’s hurdle rate is 10%. Data for the two proposals follow. Proposal X Proposal Y Required investment $120,000 $120,000 Annual after-tax cash inflows 24,000 After-tax cash inflows at the end of years 3, 6, 9, and 12 72,000 Life of the project 12 years 12 years Using net present value analysis, which proposal is the more attractive option? If Draper has sufficient funds available, should both proposals be accepted?
What is the capitalized cost of a structure that will require construction costof P1,000,000 immediately and P800,00 each year for the next 4 yearsand annual year –end maintenance of P36,000 plus the expenditure ofP200,000 an the end of each 10-year period for replacement? Assume12% interest rate.