If the capital stock equals 200 units in year 1 and the depreciation rate is 5 percent per year, then in year 2, assuming no new or replacement investment, the capital stock would equal units. O 210 O 200 195 O 190
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- An electric cooperative is considering the use of a concrete electric pole in the expansion of its powerdistribution lines. A concrete pole costs 18,000 each and will last 20 years. The company is presentlyusing creosoted wooden poles which cost 12,000 per pole and will last 10 years. If money is worth 12percent, which pole should be used? Assume annual taxes amount to 1 percent of the first cost and zerosalvage value in both cases. Determine the best alternative using: (i = 12%)a. Annual Cost (AC) Methodb. Equivalent Uniform Annual Cost (EUAC) Methodc. Present Worth Cost (PWC) MethodUse white paper Q) Eric buys a house worth $209500 by paying 19% down and the balance, with interest at j4 = 4.9%, in monthly installments of $1600 for as long as necessary. Determine Eric’s equity at the end of 4 years.Please not use of excel. Ans: 87926.24998A small company purchased now for $23,000 will lose $1,200 each year for the first 4 years. An additional $8,000 invested in the company during the fourth year will result in a profit of $5,500 each year from the fifth to the fifteenth year. At the end of 15 years, the company can be sold for $33,000. a. Determine the IRR b. Calculate the FW if MARR = 12% c. Calculate the ERR when € = 12%.
- Hampton Industries had $46,000 in cash at year-end 2018 and $15,000 in cash at year-end 2019. The firm invested in property, plant, and equipment totaling $190,000 - the majority having a useful life greater than 20 years and falling under the alternative depreciation system. Cash flow from financing activities totaled +$150,000. Round your answers to the nearest dollar, if necessary. a. What was the cash fnow from operating activities? Cash outfiow, if any, should be indicated by a minus sign. $4 b. If accruals Increased by $20,000, receivables and inventories increased by $110,000, and depreciation and amortization totaled $29,000, what was the firm's net income?Armor Investment Company is considering the acquisition of a heavily depreciated building on 10 acres of land. It expects to rent the building as a storage facility and expects to collect cash flows equal to $100,000 next year. However, because depreciation is expected to increase, Armor expects cash flows to decline at a rate of 4 percent per year indefinitely. Armor expects to earn an IRR on investment return (r) at 13 percent. a. What is the value of this property? b. Assume that after 5 years the building could be demolished and the land could be redeveloped with a strip retail improvement. The latter would produce NOI of $200,000 per year, grow at 3 percent per year, and cost $1 million to build. Investors currently earn a 10 percent IRR on such investments. How would this affect your estimate of value in (a)?1. The O & M cost of an equipment is given in the table below. Determine the EUAC of this equipment in year 6. Assume a MARR of 8%. Year 1 2 3 5 6 O&M Cost $8,000 $7,500 $6,000 $5,500 $4,500 $8,000 $9,149.87 $8,188.45 $7,407.20 ○ $7168.52
- A small company purchased now for $23,000 will lose $1,200 each year for the first 4 years. An additional $8,000 invested in the company during the fourth year will result in a profit of $5,500 each year from the fifth to the fifteenth year. At the end of 15 years, the company can be sold for $33,000.a. Determine the IRRb. Calculate the FW if MARR = 12%c. Calculate the ERR when є = 12%.(b) Ford Automobiles is considering investing in a new manufacturing facility that will cost $10 million. The facility is expected to have a useful life of 20 years and generate annual revenue of $4 million with an annual operating cost of $1.5 million. The facility will also require a major renovation at the end of the tenth year, which will cost $5 million. At the end of the 20-year useful life, the facility can be sold for $1 million. Assuming a required rate of return of 12%, what is the annual worth of the investment in the facility? Should the company invest in the facility?Your friend made an investment of P 45,000.00 for 60 days at 15% simple interest. If withholding tax is 20%, what is the net interest that he will receive at the end of two months?
- 10. Given that the discount rate is 11.5%, what is the equivalent uniform annual cash flow of the following stream of cash flows? YEAR 0 - P100,000 YEAR 1 - P200,000 YEAR 2 - P300,000 YEAR 3 - P135,00012.5 A chemical plant is considering installing a new water purification system that costs $21 500. The expected service life of the system is 10 years and the salvage value is computed using the declining-balance method with a depreciation rate of 20 percent. The operating and maintenance costs are esti- mated to be $5 per hour of operation. The expected savings are $10 per operat- ing hour. a. Find the annual worth of the new water purification system if the current operating hours are 1500 per year, on average. The MARR is 10 percent. b. What is the break-even level of operating hours? Construct a graph showing the annual worth for various levels of operating hours. the answers should be a) =4145.74 b)=671 need the solutions please to be clear to understandA bank is in the processing of rescheduling a $10 million loan paying 14% interest. If liquidated, it expects to receive $8.4 million. The rescheduling terms are as follows: Amount $10,000,000 in year 0 New maturity in years 5 Interest rate 8% Principal payments in millions $5,000,000 each in years 4 and 5 Upfront-fee 1.00% Cost of capital after rescheduling 14.00% Should the bank reschedule the loan? A Yes, reschedule the loan because the NPV is greater than liquidation value B No, do not reschedule the loan because the liquidation value is lower than the NPV C Reschedule the loan only if the cost of capital after rescheduling is 12% D Reschedule the loan only if the cost of capital after rescheduling is 15%