The University of Alaska Fairbanks, UAF is considering the conversion of an abandoned manufacturing plant adjacent to the school's campus into a 35,000-square-foot Building to house conference center, and a community computer lab. The project requires $30 million for renovation costs, additional annual fixed operating and maintenance expenses of $100,000, and variable expenses of $103 per square-foot over a 10-year period. The college expects to generate annual revenues of $7,810,000 over a 10-year period. The college uses a MARR of 7 percent per year in its economic evaluations of the new project. The market value of the building will be $2 million at the end of 10 years. For part a, please calculate your answer to 4 decimal places. Leave in decimal form. Format: 0.0000 a. What is the internal rate of return, IRR, for this project? b. Is this project economically justified? OA. No, the present worth is likely less than 0 4 OB. Yes, the future worth is greater than 0 OC. No, IRR is greater than 0 O D. Yes, the present worth is greater than 0.

The University of Alaska Fairbanks, UAF is considering the conversion of an abandoned manufacturing plant adjacent to the school's campus into a 35,000-square-foot Building to house conference center, and a community computer lab. The project requires $30 million for renovation costs, additional annual fixed operating and maintenance expenses of $100,000, and variable expenses of $103 per square-foot over a 10-year period. The college expects to generate annual revenues of $7,810,000 over a 10-year period. The college uses a MARR of 7 percent per year in its economic evaluations of the new project. The market value of the building will be $2 million at the end of 10 years. For part a, please calculate your answer to 4 decimal places. Leave in decimal form. Format: 0.0000 a. What is the internal rate of return, IRR, for this project? b. Is this project economically justified? OA. No, the present worth is likely less than 0 4 OB. Yes, the future worth is greater than 0 OC. No, IRR is greater than 0 O D. Yes, the present worth is greater than 0.

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter26: Capital Investment Analysis

Section: Chapter Questions

Problem 5MAD: Home Garden Inc. is considering the construction of a distribution warehouse in West Virginia to...

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