Determine the capitalized cost of a research laboratory which requires Php 4,500,000 for original construction: Php 110,000 at the end of every year for the first 6 years and then Php 130,000 each year thereafter for operating expenses, and Php 600,000 every 7 years for replacement of equipment with interest at 12% per annum? CC = Php 5,996,693.866 CC = Php 8,123,567.369 CC = Php 7,876,854.896 CC = Php 6,987,693.311

Determine the capitalized cost of a research laboratory which requires Php 4,500,000 for original construction: Php 110,000 at the end of every year for the first 6 years and then Php 130,000 each year thereafter for operating expenses, and Php 600,000 every 7 years for replacement of equipment with interest at 12% per annum? CC = Php 5,996,693.866 CC = Php 8,123,567.369 CC = Php 7,876,854.896 CC = Php 6,987,693.311

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 3E

See similar textbooks

Similar questions

A machine that costs $12,000 is expected to operate for 10 years. The estimated salvage value at the end of 10 years is $0. The machine is expected to save the company $2,331 per year before taxes and depreciation. The company depreciates its assets on a straight-line basis and has a marginal tax rate of 40 percent. The firm’s cost of capital is 14 percent. What is the internal rate of return (IRR) for the machine? Based on the IRR criterion, should this machine be purchased?
3. At 6%, find the capitalized cost of a gas turbine whose first cost is Php200,000,000 and life is 20 years, if the gas turbine must be partially rebuilt at a cost of Php100,000,000 at the end of each 20 years.
You are faced with making a decision on a large capital investment proposal. The capital investment amount is $640,000. Estimated annual revenue at the end of each year in the eight year study period is $180,000. The estimated annual year-end expenses are $42,000 starting in year one. These expenses begin decreasing by $4,000 per year at the end of year four and continue decreasing through the end of year eight. Assuming a $20,000 market value at the end of year eight and a MARR = ε =12% per year, answer the following questions. Using AW, determine whether this proposal is acceptable. What is the ERR of this proposal? Is it acceptable? What is the IRR of this proposal? Is it acceptable? What is the simple and discounted payback period for this proposal?
Calculate the capitalized cost of a project that has an initial cost of P3,500,000 and an additional cost of P1500, 000 at the end of every 10 yrs. The annual operating costs will be P150, 000 at the end of every year for the first 5 years and P180, 000 thereafter. In addition, there is expected to be recurring major rework cost of P400, 000 every 13 yrs. Assume i =18% a.Php 4,467,564.367 b.Php 5,673.467.567 c.Php 5,534,673.123 d.Php 4,813,109.563
Determine the capitalized cost of a series of cash flows starting at the end of the first year with $400 and increasing at the rate of $100 for the next 5 years. The series of cash flows from year 1 to 6 repeats forever. MARR= 6%
You are considering the following project: It pays you $2,500 at the end of the first year, costs $8,500 by the end of the second year and brings $6,800 a year after. What is the project's internal rate of return(s), exact external rate of return and the approximate external rate of return it current MARR is 14%?
An electric cooperative is considering the use of a concrete electric pole in the expansion of its power distribution lines. A concrete pole costs P18,000 each and will last 20 years. The company is presently using creosoted wooden poles which cost P12,000 per pole and will last 10 years. If money is worth 12%, which pole should be used? Assume annual taxes amount to 1% of first cost and zero salvage value in both cases.
Giving the following information on machine A and machine B and assuming an 8.6% MARR, which mutually exclusive alternative should be selected?
Calculate the capitalized cost of a project that has an initial cost of Php 3,000,000 and an additional investment cost of Php 1,000,000 at the end of every 10 years. The annual operating cost will be Php 100,000 at the end of every year for the first four years and Php 160,000 thereafter. In addition, there is expected to be recurring major rework cost of P300,000 every 13 years. Assume i= 15%. CC = Php 5,345,234.576 CC = Php 4,546,378.987 CC = Php 5,678,435.897 CC = Php 4,281,935.961
You purchased a building five years ago for $100,000. Its annual maintenance expense has been $5,000 per year. At the end of five years, you sold the building for $80,000. During the period of ownership, you rented out the building for $10,000 per year at the beginning of each year. Evaluate this investment when MARR is 8% per year. The payback period is, a. 4 years b. 5 years c. 2 years d. 3 years
DRAW CASH FLOW DIAGRAM Calculate the capitalized cost of a project that has an initial cost of P8,000,000 and an additional cost of P250,000 at the end of every 8 years. The annual operating costs will be P150,000 at the end of every year for the first 5 years and P200,000 thereafter. In addition there is expected to be recurring major rework cost of P500,000 every 13 years. Assume i=12%
Calculate the capitalized cost of an equipment maintained at a rate of 6% every year for P10,000, replaced every 3years for P25,000 at the same rate, and bought for P110,500. Please solve using economics formula.