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- Cash Payback Period, Net Present Value Method, and Analysis Elite Apparel Inc. is considering two investment projects. The estimated net cash flows from each project are as follows: Year Plant Expansion Retail Store Expansion 1 $450,000 $500,000 2 450,000 400,000 3 340,000 350,000 4 280,000 250,000 5 180,000 200,000 Total $1,700,000 $1,700,000 Each project requires an investment of $900,000. A rate of 15% has been selected for the net present value analysis. Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 Required: 1a. Compute the cash payback period for each project.…Estimates for a proposed small public facility are as follows: Plan A has a first costof $50,000, a life of 25 years, a $5,000 market value, and annual maintenance expensesof $1,200. Plan B has a first cost of $90,000, a life of 50 years, no market value, andannual maintenance expenses of $6,000 for the first 15 years and $1,000 per year foryears 16 through 50. Let MARR be 10% per year.(a) Find the Net Present Value, and. Net Annual Value for the two alternatives.(b) Which ones are feasible, and which one would you choose if you had to pick oneof the two?Give typing answer with explanation and conclusion A small company purchased now for $120,000 will lose $300 each year for the first four years. An additional $600 in the company in the fourth year will result in a profit of $9500 each year from the fifth through the twelfth year. At the end of 12 years, the company can be sold for $135,000. a) Draw the cash flow diagram b) Determine the IRR for this project. c) Calculate the FW if MARR is 5%. d) Calculate the ERR when ε = 7%.
- Big Bro manufacturing company purchased a delivery van having a cost of P900 000.00, a life of eight years and a salvage value of P75 000. Estimated maintenance cost is P20 000.00 per year with a major overhaul costing P80 000 required at the end of four years. Using a 14% MARR, find the annual cost of the van? (Ans. - P218 556.05)-PLEASE USE AN ACTUAL FORMULA NOT AN EXCELYou are faced with a decision on an investment proposal. Specifically, the estimated additional income from the investment is $125,000 per year; the investment cost is $400,000; and the first year estimated expense of $20,000 and will increase a rate of 5% per year. Assume an 8-year analysis period, no salvage value, and MARR = 15% per year. a. Calculate the PW and FW of this proposal? b. What is the ERR ( Ԑ=MARR) of this proposal? c. What is the Simple and Discounted payback? include the cash flow diagram and conclusionYou are faced with a decision on an investment proposal. Specifically, the estimated additional income from the investment is $125,000 per year; the investment cost is $400,000; and the first year estimated expense of $20,000 and will increase a rate of 5% per year. Assume an 8-year analysis period, no salvage value, and MARR = 15% per year. a. Calculate the PW and FW of this proposal? b. What is the ERR ( Ԑ=MARR) of this proposal? c. What is the Simple and Discounted payback? (Upload the picture of your complete solutions including the correct cash flow diagram and your conclusion.)
- Dannylyn is comparing two bridges A and B on the basis of capitalized cost at 5% interest. Bridge A has an estimated life of 25 years, initial cost of P55M, renewal cost of P35M, annual maintenance of P0.5M, repairs every five years amounting to P2M and salvage value of P5M. Bridge B has an estimated life of 50 years, initial cost of P75M, renewal cost of P75M, annual maintenance of P0.1M, repairs every five years amounting to P1M and salvage value of P10M.The initial cost can paid out of available funds. All other expenses will be defrayed by sinking funds. a. How much savings is realized by choosing the more economical of the two bridges? b. What is the capitalized cost of Bridge A?A company purchases manufacturing equipment for $ 3,950,000. The company produces 1,800 units of production per year. The revenue associated with each production unit is $ 1,310. The total annual costs per production unit is $ 630. a) What is the non-discounted payback period? b) What is the payback period if MARR = 20.00% Answer to part b) can be within a 1 year range.Value Lodges owns an economy motel chain and is considering building a new 200-unit motel. The cost to build the motel is estimated at $8,000,000; Value Lodges estimates furnishings for the motel will cost an additional $700,000 and will require replacement every 5 years. Annual operating and maintenance costs for the motel are estimated to be $800,000. The average rental rate for a unit is anticipated to be $40/day. Value Lodges expects the motel to have a life of 15 years and a salvage value of $900,000 at the end of 15 years. This estimated salvage value assumes that the furnishings are not new. Furnishings have no salvage value at the end of each 5-year replacement interval. Assuming average daily occupancy percentages of 50%, 60%, 70%, and 80% for years 1 through 4, respectively, and 90% for the 5th through 15th years, a MARR of 12%/year, 365 operating days/year, and ignoring the cost of land, should the motel be built? Base your decision on an internal rate of return analysis.…
- A company purchases manufacturing equipment for $3,872,200. The company produces 1808 units of production per year. The revenue associated with each production unit is $1,245. The cost per production unit is $562 a) What is the non-discounted payback period? b) What is the payback period if the MARR = 13.00%? Use goal seek or interest tables & linear interpolation to solve part b.MANUAL SOLUTIONS NOT EXCELDOWNVOTE IF EXCELDetermine the difference between the capitalized cost of the timber and steel penstock for a hydroelectric plant with interest of 10%: Timber Steel First Cost Php50,000 Php80,000 Estimated Life 10 years 30 years Scrap Value Php2,000 None Annual Maintenance Php1,200 Php200 Show calculations for the capitalized cost of each item separately.Carlisle Company has been cited and must invest in equipment to reduce stack emissions or face EPA fines of $18,500 per year. An emission reduction filter will cost $75,000 and have an expected life of 5 years. Carlisle’s MARR is 10%/year. Solve, a. What is the future worth of this investment? b. What is the decision rule for judging the attractiveness of investments based on future worth? c. Is the filter economically justified?