Exercise You work as a production manager in a construction company and your task is to clarify the profitability conditions of the investment to your supervisor. The investment target is a new enterprise resource planning system. You estimate its retention period to be 5 years. The company's interest rate is 10%. You have determined the costs and benefits of the investment below. The investment has no residual value. a) Prepare a cash flow statement b) Calculate the present value of the investment. c) What is the internal interest rate of the investment? d) What is the interest-bearing repayment period of the investment day e) Is the investment profitable? Justify. Use Excel formulas and functions in invoices. Investment equipment €1,000,000 software €300,000 -cabling €10,000 furnishings €25,000 Annual costs personnel costs €280,000 training €20,000 related material €20,000 Annual returns reduction of losses by €300,000 reduction of inventories by €150,000 personnel costs €360,000

Exercise You work as a production manager in a construction company and your task is to clarify the profitability conditions of the investment to your supervisor. The investment target is a new enterprise resource planning system. You estimate its retention period to be 5 years. The company's interest rate is 10%. You have determined the costs and benefits of the investment below. The investment has no residual value. a) Prepare a cash flow statement b) Calculate the present value of the investment. c) What is the internal interest rate of the investment? d) What is the interest-bearing repayment period of the investment day e) Is the investment profitable? Justify. Use Excel formulas and functions in invoices. Investment equipment €1,000,000 software €300,000 -cabling €10,000 furnishings €25,000 Annual costs personnel costs €280,000 training €20,000 related material €20,000 Annual returns reduction of losses by €300,000 reduction of inventories by €150,000 personnel costs €360,000

Fundamentals Of Construction Estimating

4th Edition

ISBN:9781337399395

Author:Pratt, David J.

Publisher:Pratt, David J.

Chapter18: Life-cycle Costing

Section: Chapter Questions

Problem 10RQ

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