6. A construction firm can achieve a $15,000 costsavings in Year-1 and increased by $2,000 eachyear for the next 5 years by converting their dieselengines for biodiesel fuel. At an interest rate of15%, what is the equivalent annual worth (A) of thesavings? [4]

Detailed explanation: Understanding the ProblemWe are tasked with finding the equivalent annual…

Answered: 6. A construction firm can achieve a…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 5PA: Falkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated...

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Similar questions

8
A company is considering an investment that will cost $759,000 and have a useful life of 6 years. The cash flows from the project are expected to be $450,000 per year in the first two years then $170,000 per year for the last 4 years. If the appropriate discount rate is 16.0 percent per annum, what is the NPV of this investment (to the nearest dollar)? Select one: O a. $316870 O b. $321617 O c. $1834870 O d. $439045
2.) LandMING has borrowed $8 Million to implement a new production line in its Dallas metal plant. If the interest rate on the loan is 10% per year (on unrecovered balance) for 5 years, what is the amount of interest payable for year 2?
Q3. You have purchased a machine costing $40 000. The machine will be used for two years, and at the end of this time, its salvage value is expected to be $20 000. The machine will be used 6 000 hours during the first year and 8 000 hours during the second year. The expected annual net savings will be $45 000 during the first year and $52 000 during the second year. If your interest rate is 12%, what would be the equivalent net savings per machine hour? (Hint: Calculate Capital recovery cost and then net annual saving and finally equivalent net savings per machine hour.)
Zwango Plus Manufacturing expects that fixed costs of keeping its Zephyr Hills Plant operating will be $2.1M this year. If the fixed costs increase by $125,000 each year, what is the EUAC for a 15-year period? Assume the interest rate is 10%.
A property worth $16 million can be refinanced with an 85% loan at 9.5% over 20 years. The balance on the current loan is $12,148,566. Loan payments are $113,302 per month. The loan balance in 10 years will be $8,396,769. If the property is expected to be sold in 10 years, what is the incremental cost of refinancing? a)11.18% b)12.42% c) 10.45% d) 10.94%
What is the future worth six years from now of a present cost of $375,000 to Corning, Inc. at an interest rate of 10% per year?
E1
0. A $45,000 investment in a new conveyor system is projected to improve throughput and increasing revenue by $14,000 per year for five years. The conveyor will have an estimated market value of $4,000 at the end of five years. Using NPV with a MARR of 12%, is this a good investment?
How much can a construction company afford to spend now on new equipment in lieu of spending300,000 one year from now and 200,000 three years from now, if the company uses an interest rateof 12% per year?
A company buys a printing machine for 21,000. It is expected for that machine to generate 3000 dollars in the first year, 5000 dollars in the second year, and 15000, in the third year. What is the NVP for the project if the interest rate is 10.5% compounded semi-annually? A. $ + 770.56 B. $ + 460.32 C. $ -770.56 D. $ - 460.32
A hydropower plant that has been recently commissioned is expected to earn a revenue of $75,000 from sales of electricity in five years. What is the present worth of this revenue at 10% discount rate? O $37.500 O S42.568 O $75000 O $112.500

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6. A construction firm can achieve a $15,000 cost savings in Year-1 and increased by $2,000 each year for the next 5 years by converting their diesel engines for biodiesel fuel. At an interest rate of 15%, what is the equivalent annual worth (A) of the savings? [4]