A contractor is saving money for a lucrative project. The initial cost is $175,000, annual outlays for maintenance is $1,500 and $4,000 every 3 years. There will be an additional one- time cost of $15,000 in 2 years for miscellaneous fixtures. At an interest rate of 8% per annum, how much money must he save now (in $) for the project?

A contractor is saving money for a lucrative project. The initial cost is $175,000, annual outlays for maintenance is $1,500 and $4,000 every 3 years. There will be an additional one- time cost of $15,000 in 2 years for miscellaneous fixtures. At an interest rate of 8% per annum, how much money must he save now (in $) for the project?

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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Similar questions

A project costs $880 today, yields $150 / year for three years and $400 for two years. Then there is an expense of $50 at the end of the project. The interest rate is 6% per annum. Should you take this project?
Beene Distributing is considering a project that will return $150,000 annually at the end of each year for the next six years. If Beene demands an annual return of 7% and pays for the project immediately, how much is it willing to pay for the project?
A project costs $1500 today, yields $300 per year for three years and $700 for two years. Then there is an expense of $500 at the end of the project. The interest rate is 7% per annum. 1) Find the net present value. 2) Should you take this project?
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Skyline Industries will need $2.2 million in 4.5 years from now to replace some equipment. Currently, the firm has some extra cash and would like to establish a savings account for this purpose. The account pays 3.6 percent interest, compounded annually. How much money must the company deposit to fully fund the equipment purchase? Can the calculator and excel solution be provided?
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You wish to evaluate a project requiring a $60,100 initial investment and having a useful life of seven years. What minimum annual cash inflow do you need if the cost of capital is 8.2%? If the project earns $12,900 per year, what is its IRR? Is the project acceptable? The minimum annual cash inflow necessary is $ (Round to the nearest cent.)
You are assessing the minimum amount of investment that you will be willing to invest today for a billboard construction project. The useful life of the steel structure is 10 years. Monthly advertising space rental costs P120,000. Advertising contracts requires prepayment of the lease before commencing the rental. Rental revenue will be deposited in a deposit account with 2.5% interest rate, compounded quarterly. What is the minimum amount of investment for the billboard steel foundation today?

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