A new lock is being considered for a dam, and it will cost $650,000 to design and build. Every 10 years, $100,000 of maintenance will be required. In addition, a one- time upgrade costing $50,000 will be required at the end of year-5. Annual operating expenses are expected to be $30,000 for the first 15 years and $35,000 per year thereafter. Compute the cost of perpetual service at i = 8%. 165 000

A new lock is being considered for a dam, and it will cost $650,000 to design and build. Every 10 years, $100,000 of maintenance will be required. In addition, a one- time upgrade costing $50,000 will be required at the end of year-5. Annual operating expenses are expected to be $30,000 for the first 15 years and $35,000 per year thereafter. Compute the cost of perpetual service at i = 8%. 165 000

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

For your 21st birthday, your grandfather offers you a gift of $1,000 today. However, you have the choice of waiting 3 years and receiving $1,500 or waiting 5 years and receiving $3,000. If your money grows at a rate of 8% compounded annually, which alternative should you choose? Choice 1: P = $ Choice 2: P = $ Choice 3: P = $ Round entry to the nearest dollar. Tolerance is ±4.
The present price (year 0) of kerosene is $4.30 per gallon, and its cost is expected to increase by 10% per year. (At the end of year 1, kerosene will cost $4.73 per gallon.) Mr. Garcia uses about 800 gallons of kerosene for space heating during a winter season. He has an opportunity to buy a storage tank for $600, and at the end of four years, he can sell the storage tank for $100. The tank has a capacity to supply four years of Mr. Garcia's heating needs. So, he can buy four years' worth of kerosene at its present price ($4.30), or he can invest his money elsewhere at 6% interest. Should he purchase the storage tank? Assume that kerosene purchased on a pay-as-you-go basis is paid for at the end of the year. (However, kerosene purchased for the storage tank is purchased now.)
Find the present worth of the following infinite cash flows, using i = 8%/year. Year Cash flows at the end of each year 1 0 2 0 3 0 4 $500 5 $1100 6 $500 7 $1100 8 $500 9 $1100 : :
Find the Future Worth (F) of the following geometric series cash flow: 0 1 1000 i = 10% 23 4 1100 1210 g= 10% 10 2,358
2.55 HGT Oil expects receipts from a fracked well to decline according to an arithmetic gradient of $50,000 per year. If this year's receipts are ex- pected to be $280,000 (i.e., end of year 1) and the company expects the useful life of the well to be 5 years, (a) what is the amount of the cash flow in year 3, and (b) what is the equivalent uniform an- nual worth in years 1 through 5 of the income from the well at an interest rate of 12% per year? 56. For the cash flow rewve nues shown hal Si
Please answer question 4 with details on how to do it. Thank you.
Garnette Corp is considering the purchase of a new machine that will cost $342,000 and provide the following cash flows over the next five years: $99,000, $88,000, $92,000. $87,000, and $72,000. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return in Excel. see Appendix C.
You are being asked to evaluate the worthiness of an investment that requires you to spend $120,000 today in return for receiving $25,000 each year for seven years (starting one year from now). At the end of the seven year study period, the investment can be sold for $10,000. The MARR = 12% per year. Compute the AW of this investment. Round your answer to the nearest dollar. Answer should be -301
A new office building has been constructed at a cost of $3.000,000, It is estimated to have a life of 50 years with a value at that time of $200.000, It will have maintenance costs of $10,000 per year. It will also have major repairs costing $80,000 that occur at years 10, 20, 30 and 40. It will have additional repairs at the end of year 25 costing $250,000. Determine the equivalent uniform annual cost if the rate of interest of the firm is 7%.
A man is considering putting up his own enterprise, where an investment of 800,000 will be required and will take 15 years to recoup. He estimates his annual sales at 800,000 along with the following operating costs. Materials =160,000/ yearLabor = 280,000/ yearOverhead = (40,000 + 10% of sales)/ yearSelling Expense = 60,000/ yearThe man will give up his regular job paying 216,000 Php per year and devote all his time to the operation of his business, this will result in decreasing his labor cost by 40,000 per year, material cost by 28,000 per year and overhead cost by 32,000 per year. If the man expects to earn at least 20% of his capital, should he invest? Solve using a) Rate of return method b) annual worth method c)present worth method d)equivalent uniform annual cost method
If the interest rate is 4%, what is the approximate future value of $15,000 in 10 years? $15,900 $17,949 $10,133 $22,204
A company is considering an investment (at time = 0) in a machine that produces large plastic boxes. The cost of the machine is 43,118 dollars with zero expected salvage value. Annual production in units during the 3-year life of the machine is expected to be (starting at time = 1) 4,213, 8,486, and 12,468. The sale price per unit of the plastic boxes is 12 dollars in year one, and then expected to increase by 9% per year. Production costs per unit will be 5 dollars in year one, and then expected to increase by 3% per year. Depreciation on the machine is 10,192 dollars per year, the tax rate is 40% and the minimum acceptable rate of return is 6% percent. Calculate the net present value of this investment. Assume all flows are at the end of each year. (note: round your answer to the nearest cent, and do not include spaces, currency signs, plus or minus signs, or commas)