19 A highwvay construction company is under contract to build anew roadway through a scenic area and two rural towns inColorado. The road is expected to cost $18 million, with annualupkeep estimated at S150,000 per. Additional income fromtourists of $900,000 per year is estimated If the road isexpected to have a useful commercial life of 20 years, use onespreadsheet to determine if the highway should be constructedat an interest rate of 696 per year by applying (a) the B-Cmethod, (b) the B/C method, and (c) the modified B C method.WVERONSAN FRANCISCO

The Benefit-Cost Ratio (B/C ratio) is a financial metric used to assess the economic feasibility of…

Answered: A highway construction company is under…

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 proposal is in place to set up a nuclear power plant cooling water filtration project along a river. The benefits (B) are projected to be 10,000 USD per year forever, starting in year 1. The costs (C) are 50,000 USD in year 0 and 50,000 USD at the end of year 2. At 10% annual interest, it this project beneficial? Provide solutions and justifications
The initial investment in machinery would be $8 million immediately and the project is expected to last for three years. Investment in machinery receives tax allowable depreciation of 25% per annum on a straight-line basis. Allowances are receivable one year in arrears. The machinery will be sold at the end of the project for $5 million, in year 3 prices. And the answer is in the picture. How to calculate the answer of Tax Allowable depreciation?
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You are working on a bid to build four small apartment buildings a year for the next three years for a local community. This project requires the purchase of $900,000 of equipment which will be depreciated at a CCA rate of 30% over the next three years. The equipment can be sold at the end of the project for $400,000 (ignore any gains or losses). You plan to borrow half of the equipment cost at a rate of 5.5%. You will also need $200,000 in net working capital maintained over the life of the project. The labour costs are expected to be $100,000 per year, fixed costs will be $175,000 a year and the materials will be $140,000 per building per year. Your required rate of return is 12% for this project. Ignoring taxes, what is the minimal amount, that you should bid per building?
Delta Corporation wishes to invest in one of three transport infrastructure projects X, Y and Z with initial outlays of $800 million, $850 million and $930 million respectively. Projects are expected to produce each year free after-tax cash flows of $252 million for project X, project Y is expected to generate $250 million and project Z $290 million. Each project has depreciable lives of 10 years. The required rate of return is 15 percent. a. Use the Net Present Value Technique and determine the most appropriate investment for Delta Corporation. b. State four (4) reasons why Delta Corporation should not use the Payback Technique in order to determine the most viable infrastructure project. c. Describe two (2) factors that impact the demand for rail transport.
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Geo-Star Manufacturing Company is considering a new investment in a punch-press machine that will cost $96,000 and has an annual maintenance cost of $10,800. There is also an additional overhauling cost of $23,000 for the equipment once every four years. Assuming that this equipment will last infinitely under these conditions, what is the capitalized equivalent cost of this investment at an interest rate of 15%? Click the icon to view the interest factors for discrete compounding when i=15% per year. The capitalized equivalent cost of this investment is $ thousand. (Round to the nearest whole number.) More Info Single Payment Compound Amount Factor Equal Payment Series Sinking Present Fund Compound Amount Factor (F/A, i, N) Capital Recovery Worth Factor Factor Factor N (F/P, i, N) (A/F, i, N) (P/A, i, N) (A/P, i, N) 1 1.1500 1.0000 1.0000 0.8696 1.1500 2 1.3225 2.1500 0.4651 1.6257 0.6151 3 1.5209 3.4725 0.2880 2.2832 0.4380 4 1.7490 4.9934 0.2003 2.8550 0.3503 5 2.0114 6.7424 0.1483…
PLEASE USE EXCEL, SHOW FORMULAS, AND INCLUDESPiderplot HiTek Manufacturing is purchasing a large tract of land for a new facility. Its loan is for $3 million, but this may vary by plus or minus 10%. The loan will be paid off in 15 years using annual payments, but this could be as low as 10 years or as high as 30 years. If the interest rate is 10% (between 8% and 12%), How much is each payment? Construct a spiderplot. Which change would be most significant?

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