Lakeside Marina is considering expanding its seasonal docking facilities. Construction would take place in year one, with costs of $145,000 paid at the start of the first year, and some additional landscaping costs of $3,500 paid at the start of the second year. The docks would have a useful life to the end of year 15, with no residual value. The increased capacity should generate increased annual profits of $15,000 at the end of years 2 through 5, and $20,000 at the end of years 6 through 15. If Lakeside’s cost of capital is 6% compounded annually, a) What is the NPV of the project?

Lakeside Marina is considering expanding its seasonal docking facilities. Construction would take place in year one, with costs of $145,000 paid at the start of the first year, and some additional landscaping costs of $3,500 paid at the start of the second year. The docks would have a useful life to the end of year 15, with no residual value. The increased capacity should generate increased annual profits of $15,000 at the end of years 2 through 5, and $20,000 at the end of years 6 through 15. If Lakeside’s cost of capital is 6% compounded annually, a) What is the NPV of the project?

Algebra and Trigonometry (MindTap Course List)

4th Edition

ISBN:9781305071742

Author:James Stewart, Lothar Redlin, Saleem Watson

Publisher:James Stewart, Lothar Redlin, Saleem Watson

Chapter10: Systems Of Equations And Inequalities

Section10.FOM: Focus On Modeling: Linear Programming

Problem 14P

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