A company is considering a project which requires $4.1 million in capital investment. The project can bring in an annual revenue of $150k/year over the next 10 years. The annual operation cost (e.g. labor and supplies) is $47k/year. Starting from year 5, the equipment will need major maintenance and this cost starts at $15k/year and increase by $15k each year until the end of the project life time (10 years). The equipment has a salvage value of $410k at the end of the project. Calculate the project's net future value at year 10 to find out whether it's worth investing. The interest rate is 7%. Please only fill in the number of your calculated result in the blank, e.g., if the result is $100k, fill in "100"; also round to the nearest integer."
A company is considering a project which requires $4.1 million in capital investment. The project can bring in an annual revenue of $150k/year over the next 10 years. The annual operation cost (e.g. labor and supplies) is $47k/year. Starting from year 5, the equipment will need major maintenance and this cost starts at $15k/year and increase by $15k each year until the end of the project life time (10 years). The equipment has a salvage value of $410k at the end of the project. Calculate the project's net future value at year 10 to find out whether it's worth investing. The interest rate is 7%. Please only fill in the number of your calculated result in the blank, e.g., if the result is $100k, fill in "100"; also round to the nearest integer."
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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Transcribed Image Text:A company is considering a project which requires $4.1 million in capital investment. The project can bring in an
annual revenue of $150k/year over the next 10 years. The annual operation cost (e.g. labor and supplies) is $47k/year.
Starting from year 5, the equipment will need major maintenance and this cost starts at $15k/year and increase by
$15k each year until the end of the project life time (10 years). The equipment has a salvage value of $410k at the end
of the project. Calculate the project's net future value at year 10 to find out whether it's worth investing. The interest
rate is 7%.
Please only fill in the number of your calculated result in the blank, e.g., if the result is $100k, fill in "100"; also round
to the nearest integer."
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