A new production system for a factory is to be purchased and installed for $115,042. This system will save approximately 300,000 kWh of electric power each year for a 6- year period. Assume the cost of electricity is $0.10 per kWh, and factory MARR is 15% per year, and the salvage value of the system wil be $9,196 at year 6. Using the PW method to analyzes if this investment is economically justified A- calculate the PW of the above investment and insert the result below

A new production system for a factory is to be purchased and installed for $115,042. This system will save approximately 300,000 kWh of electric power each year for a 6- year period. Assume the cost of electricity is $0.10 per kWh, and factory MARR is 15% per year, and the salvage value of the system wil be $9,196 at year 6. Using the PW method to analyzes if this investment is economically justified A- calculate the PW of the above investment and insert the result below

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 remotely situated fuel cell has an installed cost of $1,900 and will reduce existing surveillance expenses by $500 per year for 15 years. The salvage (market) value after 15 years is $350. The border security agency’s external investment rate is the same as its MARR at 8% per year. What is the ERR of the project?
A mine would require an investment of $5 million at the beginning of the first year and a further investment of $5 million at the end of the first year. Mining operations are expected to yield annual year-end profits of $1 million starting in Year 2. The ore body will sustain 10 years of mining operations. At the end of the last year of operations, the mining company would also have to spend $1 million on environmental restoration. Would the project provide the mining company with a rate of return exceeding its 10% cost of capital?
ABC Company is looking to invest in some new machinery to replace its current malfunctioning one. The new machine, which costs P420,000, would increase annual revenue by P200,000 and annual cash expenses by P50,000. The machine is estimated to have a useful life of 12 years and P30,000 salvage value. Requirements: 1. Compute for the Accounting rate of return on initial investment 2. Compute for the Accounting rate of return on average investment.
Assume you have been asked to evaluate an investment in capital equipment for the production of biofuels. The machine will cost $215,000 and it will last 10 years (useful and depreciation lifespans). Using straight-line depreciation, the salvage value for the investment is $0. You expect the equipment to have a terminal value of $20,000 at the end of the investment period. The machine has an annual maintenance cost of $6,000. Your marginal tax rate is 30%; remember that you get to keep (1-m) for everything other than the depreciation shield on an after-tax basis (it’s simply m * depreciation shield). Your after tax-cost of capital (discount rate) is 9.5%. Labor costs in the production of biofuels are $17,500/year. The machine will produce 25,500 units of biofuel annually that will be sold at $2.50/unit. Fill in the missing pieces (a through h) in the table below to complete the NPC analysis Item Pre-tax After-tax Time Growth Rate Discount Rate P.V. Factor Present…
Give typing answer with explanation and conclusion A new production system for a factory is to be purchased and installed for $154982. This system will save approximately 300,000 kWh of electric power each year for a 6-year period. Assume the cost of electricity is $0.10 per kWh, and factory MARR is 15% per year, and the salvage value of the system will be $9668 at year 6. Using the PW method to analyzes if this investment is economically justified A- calculate the PW of the above investment and insert the result below.
salvage value of the project is estimated to be $ million (the value of the land). The project's life is years and the annual operating expenses are estimated to be $ million. The MARR for such projects is % per year. What must the minimum annual revenue be to make the shopping center a worthwhile venture?
Explanation is necessary. Pls concept
Baghiben
A solar lighting system is to be purchased and installed for 310,000. This system will save approximately 300,000 kWh of electric power each year for a 6-year period with no additional O&M costs. Assume the cost of electricity is 10 per kWh, and company’s MARR is 15% per year, and the market value of the system will be 10,000 at EOY 7. Using the PW method, is this a good idea?
Purple Haze Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $526,528 is estimated to result in some amount of annual pretax cost savings. The press will have an aftertax salvage value at the end of the project of $86,879. The OCFS of the project during the 4 years are $170,654, $199,481, $175,232 and $169,873, respectively. The press also requires an initial investment in spare parts inventory of $23, 482, along with an additional $1,631 in inventory for each succeeding year of the project. The shop's discount rate is 6 percent. What is the NPV for this project?
GM is setting up a new assembly line for their electric cars. The expected purchase price of the assembly line equipment is $1,200,000, and the estimated operating costs will average $320,000 per year. The expected salvage value in 10 years, is $182,000. The MARR is 20%. Determine the equivalent annual cost of the equipment.
A retrofitted space-heating system is being considered for a small office building. The system can be purchased and installed for P11,000,000, and it will save an estimated 300,000 kilowatt-hours (kWh) of electric power each year over a six-year period. A kilowatt-hour of electricity costs P 10, and the company uses a MARR of 15% per year in its economic evaluations of refurbished systems. The market value of the system will be P 80,000 at the end of six years, and additional annual operating and maintenance expenses are negligible. Use the PW method to determine whether this system should be installed. Please show the solution. Solutions in excel is acceptable.

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