5. A retrofitted space-heating system is being considered for a small office b system can be purchased and installed for $110,000, and it will save an estima kilowatt-hours (kWh) of electric power each year over a six-year period. A kild electricity costs $0.10, and the company uses a MARR of 15% per year in i evaluations of refurbished systems. The market value of the system will be $ end of six years, and additional annual operating and maintenance ex hegligible. Use the PW method to determine whether this system should be i

5. A retrofitted space-heating system is being considered for a small office b system can be purchased and installed for $110,000, and it will save an estima kilowatt-hours (kWh) of electric power each year over a six-year period. A kild electricity costs $0.10, and the company uses a MARR of 15% per year in i evaluations of refurbished systems. The market value of the system will be $ end of six years, and additional annual operating and maintenance ex hegligible. Use the PW method to determine whether this system should be i

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A new furnace for your small factory will cost $47,000 and a year to install, will require ongoing maintenance expenditures of $1,500 a year. But it is far more fuel-efficient than your old furnace and will reduce your consumption of heating oil by 4,400 gallons per year. Heating oil this year will cost $2 a gallon; the price per gallon is expected to increase by $0.50 a year for the next 3 years and then to stabilize for the foreseeable future. The furnace will last for 20 years, at which point it will need to be replaced and will have no salvage value. The discount rate is 8%. a. What is the net present value of the investment in the furnace? (Do not round intermediate calculations. Round your answer to the nearest whole dollar.) b. What is the IRR? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) c. What is the payback period? (Do not round intermediate calculations. Round your answer to 2 decimal places.) d. What is the…
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Show in excel format how to solve the following - Westland Manufacturing spends $20,000 to update the lighting in its factory to more energy - efficient LED fixtures. This will save the company $4,000 per year in electricity costs. The company estimates that these fixtures will last for 10 years. If the company's cost of funds is 8%, what is the discounted payback period of this project?
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For your new laboratory, you plan to purchase energy efficient freezers. There are two models in the market: Model X costs $100,000, and you need two units of model X for your project. Maintaining costs would be $50,000 and decreasing by $10,000 for each unit per year. Each freezer can be used for four years. At the end of which time, you estimate that the salvage value will be $70,000 for both freezers. Model Y costs $250,000 each. The maintaining cost of this model would be $10,000 per year and it would be decreasing by $5,000 starting in year 4. The salvage value of both model Y at the end of seven years is $60,000. Once again, two units of model Y is required for your project. Since you must complete your project in two years, you estimated that, the model X could be sold for $50,000 each and the model Y for $125,000 each after two years. Find the present worth difference between two models using MARR=10%. Question 3 options: a) Between $35,640 and $37,800…
A retrofitted space-heating system is being considered for a small office building. The system can be purchased and installed for P11,000,000, and it will save an estimated 300,000 kilowatt-hours (kWh) of electric power each year over a six-year period. A kilowatt-hour of electricity costs P 10, and the company uses a MARR of 15% per year in its economic evaluations of refurbished systems. The market value of the system will be P 80,000 at the end of six years, and additional annual operating and maintenance expenses are negligible. Use the PW method to determine whether this system should be installed. Please show the solution. Solutions in excel is acceptable.
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i need the answer quickly
Bhupatbhai
An injection molding machine can be purchased and installed for $75,000. It has a GDS recovery period of five years under the MACRS, but it will only be kept in service for four years. The net savings that can be attributed to this machine is estimated to be $25,000 in the first year,and to decrease by $2,500 each year in the following years. It is believed that the machine can be sold for $30,000 at the end of year four. An effective income tax rate of 35% is used by the company and the after tax MARR equals 15%. Should a recommendation be made to purchase the machine? Why or why not?
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GiGi Industries must replace its magnesium purification system. Quick & Dirty Systems sells a relatively cheap purification system for $10 million. The system will last 6 years. Do-It-Right sells a sturdier but more expensive system for $12 million; it will last for 8 years. The cheaper system will require $1.1 million in operating costs per year which is 10% higher than the more expensive system. Both will be depreciated straight-line to a final value of zero over their useful lives; neither will have any salvage value at the end of its life. The firm’s tax rate is 30 percent and the discount rate is 11 percent. Which system should GiGi install?

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