Problem #4: For the following cash flows, calculate the Present Worth at an interest rate of 10%.12,00010,0008,0006,0004,0000 1 2 34Hint:12,000 12,000 12,000 12,000 12,00012,00010,0008,0006,0008,0004.0004,000 6,0002,0001450 1 2 3 41234.

Answer: Year 1 : PV = FV / (1+i)^n Pv = 12000/(1.01)^1 Pv = 12000/(1.1) Pv = 10,909.09…

Answered: Problem #4: For the following cash…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Which equation below gives at10% interest the total EUAC of an asset with an initial cost of $30,000, an estimated salvage value of $12,000 after its 7 -year service lile a, O&M costs of $25,000 per year? EUAC=($30,000−12,000)(A/P,10%,7)+($12,000)(A/F,1006,7)+$25,000 EUAC=($30,000−12,000)(A/P,10%,7)+($12,000)(0.10)+$25,000(A/F,10%,7) EUAC=($30,000−12,000)(A/R,10%,7)+($12,000)(0.10)+$25,000 EUAC=($30,000−12,000)(A/P,10%,7)+$25,000
Consider a proposed project that has the following costs and benefits. Using linear interpolation, what is the project's simple or conventional payback period? Year Costs Benefits 0 $4,000 1 2,000 2 $1,500 3 1,500 4 1,500 5 2,300 6 2,300 A. 6.58 years B. 4.65 years C. 3.98 years D. 5.41 years
INR Ltd’s earnings per share next year is expected to be $2.10 and this is expected to grow at5% p.a. for the foreseeable future. Its required rate of return on equity has been estimated at 9%p.a. INR Ltd has a policy of reinvesting 40% of its earnings. The present value of INR Ltd’sgrowth opportunities is closest to: A. $7.78.B. $8.17.C. $11.11.D. $12.11
) A certain warehouse is worth P1,650,000. The average value of the merchandise in the warehouse is P1,500,000. The annual insurance rate on the warehouse is 1% and the merchandise stored in the warehouse, 0.9%. A proposal for the installation of a fire sprinkler system is being consider. The system will cost P80,000 and will effect a savings of 70% in a both insurance premiums. Monthly maintenance is estimated to be P500 and annual taxes is P4,000 for the sprinkler system. The owners of the warehouse demand that the investment in such equipment be written-off within 10 years. Invested capital can be expected to earn a minimum return of about 17%. Would you advice the installation? (Uses ROR)
Big Trucking Company has purchased a $100,000 dump truck that has a useful life of 8 years. After the first year of use, the market value of the dump truck falls to $70,000. If the highest one year return available is 10 percent, what is the one year return from selling the dump truck? A.$60,000 B.$70,000 C.$10,000 D.$7,000
Determine the net present worth (NPW) of the cash flows given in table below for an investment opportunity being presented to a company. MARR =12% Year 0 1-10 11-15 16-25 26-30 Cash Flow -$100K 10K 20K -5K 30K Group of answer choices $90,030 $80,914 $72,916 $112,200
Thirteen years ago, you purchased a bond with a 20-year maturity, a $1,000 par value, a 10% nominal coupon rate, with semi-annual coupon payments. The economy interest rate is currently 3% per half year. The first payment is due immediately, and there are 7 more years of semi-annual payments remaining. What is the current market value of the bond (within $10)? Question 10 options: 1216 1236 1256 1276 None of the above
Consider a palletizer at a bottling plant that has a first cost of $150,000, operating and maintenance costs of $17,500 per year, and an estimated net salvage value of $25,000 at the end of 30 years. Assume an interest rate of 8%. What is the present equivalent cost of the investment if the planning horizon is 30 years? a. $335,000. b. $344,500. c. $360,000. d. $395,500.
You have been asked by the chief financial officer of your company to estimate what thecompany’s share price will be at the end of four years from today. Your company has recentlypaid a dividend of $1.00 which is expected to grow at 5% p.a. over the foreseeable future. Ifthe company’s required rate of return on equity is 10% your price estimate at the end of year 4will be closest to: A. $20.00.B. $21.00.C. $24.30.D. $25.50.
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 - P135,000
Edinburgh Newcastle £000 £000Franchise fee (year 0) 8,700 7,950New buses (year 0) 4,120 3,890Scrap value (year 5) 110 95Forecast net cash inflowsYear 1 3,780 3,500Year 2 4,150 3,850Year 3 4,550 4,200Year 4 5,120 5,150Year 5 4,900 4,950 calculate the payback period for both the…
I want you to provide me the Cash Flow diagram of the problem. Only cash flow diagram, the solution is already there. Thanks in advance! The annual estimated cash flow is $140,000. The salvage value will be 12% of the initial price after 5 years. The discount rate (r) is 18% Let us assume the initial price of the doughnut machine be X. PV of cash inflows=PV of cash outflows$140,000×PVAF4,18%+.12X×PVF5,18%=X$140,000×2.69006180465+.12X×0.43710921621=X$376,608.652651=X-0.05245310594$376,608.652651=0.94754689406XX=$397,456.479475 The maximum purchase price of the doughnut machine is $397,456.48.

SEE MORE QUESTIONS

Recommended textbooks for you

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

Principles of Economics (MindTap Course List)

Economics

ISBN:

9781305585126

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Managerial Economics: A Problem Solving Approach

Economics

ISBN:

9781337106665

Author:

Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:

Cengage Learning

Managerial Economics & Business Strategy (Mcgraw-…

Economics

ISBN:

9781259290619

Author:

Michael Baye, Jeff Prince

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS

Problem #4: For the following cash flows, calculate the Present Worth at an interest rate of 10%. 12,000 10,000 8,000 6,000 4,000 0 1 2 3 4 Hint: 12,000 12,000 12,000 12,000 12,000 12,000 10,000 8,000 6,000 8,000 6,000 4,000 4,000 2,000 %D 3 4 0 1 2 3 4 0 1 2 3 4 5