A new water treatment plant proposed for Anytown, has an initial cost of P56 million. The new plant will service the 7,500 residential customers for the next 30 years. It is expected to save each customer P125 per year. The plant will require a major overhaul every 5 years, costing P1million. Determine the benefit/cost ratio at the city’s interest rate of 6%. Use PW and EUAC. complete solutions

A new water treatment plant proposed for Anytown, has an initial cost of P56 million. The new plant will service the 7,500 residential customers for the next 30 years. It is expected to save each customer P125 per year. The plant will require a major overhaul every 5 years, costing P1million. Determine the benefit/cost ratio at the city’s interest rate of 6%. Use PW and EUAC. complete solutions

Name: A new water treatment plant proposed for Anytown, has an initial cost
Uploaded: 2022-11-30T03:40:23.000Z
Channel: Bartleby
Description: A new water treatment plant proposed for Anytown, has an initial cost of P56 million. The new plant will service the 7,500 residential customers for the next 30 years. It is expected to save each customer P125 per year. The plant will require a major

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 10PA: The Ham and Egg Restaurant is considering an investment in a new oven that has a cost of $60,000,...

See similar textbooks

Similar questions

Street lighting fixtures and their sodium vapor bulbs for a two-block area of a large city need to be installed at a first cost (investment cost) of $140,000. Annual maintenance expenses are expected to be $6,600 for the first 5 years and $9,500 each year thereafter upto 30 years. With an interest rate of 6% per year, what is the present worth cost of this project? Choose the closest answer below. A. The present worth cost of the project is $298,567. B. The present worth cost of the project is $258,550. C. The present worth cost of the project is $289,243. D. The present worth cost of the project is $361,614.
Street lighting fixtures and their sodium vapor bulbs for a two-block area of a large city need to be installed at a first cost (investment cost) of $100,000. Annual maintenance expenses are expected to be $6,650 for the first 9 years and $9,500 each year thereafter upto 30 years. With an interest rate of 8% per year, what is the present worth cost of this project? Choose the closest answer below OA. The present worth cost of the project is $236,701. OB. The present worth cost of the project is $248,491. OC. The present worth cost of the project is $189,145 OD. The present worth cost of the project is $281,813 27
Developers are going to install an airconditioning system in their building and, as a consequence, they believe they can increase rents by $40,000 per month. System A will cost $1,850,000 and monthly maintenance is $4000; system B will cost $1,020,000 and monthly maintenance is $12,000. Using EUAC analysis over 5 years with an interest rate of 18% per year, which alternative should be selected?
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
Management of Blossom Mints, a confectioner, is considering purchasing a new jelly bean-making machine at a cost of $312,500. They project that the cash flows from this investment will be $75,000 for the next seven years. If the appropriate discount rate is 14 percent, what is the NPV for the project? - NPV $?
2. A new electric power generation plant is expected to cost $42,000,000 to complete. The revenues generated by the new plant are expected to be $3,875,000 per year, while operational expenses are estimated to be $2,000,000 per year. The plant will last 40 years, and the electric authority uses a 3% interest rate. Determine if the plant will be able to recover its investment using the following methods: a. IRR (show your solution for interpolation; use 5 decimal places for the interpolation procedure) b. Payback period
Campbell Manufacturing is considering the purchase of a new welding system. The cash benefits will be $480,000 per year. The system costs $1,350,000 and will last 10 years. Compute the NPV for Campbell Manufacturing, assuming a discount rate of 12%
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?
Irrigation canals are proposed to be built in an arid region. The initial cost is estimated to be P2,500,000 with annual maintenance and operation cost of P48,000. For maximum efficiency, the canal will be dredged every 5 years at a cost of P50,000. Annual income from farmers and cooperatives who benefit from the project is expected to be P320,000. Assuming an annual interest rate of 9% and a 30-year planning horizon, determine whether the project should be undertaken.
Street lighting fixtures and their sodium vapor bulbs for a two-block area of a large city need to be installed at a first cost (investment cost) of $120,000. Annual maintenance expenses are expected to be $6,500 for the first 20 years and $8,500 for each year thereafter. The lighting will be needed for an indefinitely long period of time. With an interest rate of 10% per year, what is the capitalized cost of this project (choose the closest answer below)? (a) $178,313 (b) $188,000 (c) $202,045 (d) $268,000.
Tower City aims to construct a new bypass between two main routes that will reduce commuter travel time. The route will cost $15 million and will save 17,500 people $100 per year in petrol costs. The path will be paved. Every year, at a cost of $7,500, the surface must be refinished. The road will be in use for the next 20 years. Determine if Tower City should construct the road. Money has an interest rate of 8%(ε = interest rate) Note: Show final answer in two decimal places and show complete solution e. The simple payback period is on Year Blank 5 f. The discounted payback period is on Year Blank 6
Tower City aims to construct a new bypass between two main routes that will reduce commuter travel time. The route will cost $15 million and will save 17,500 people $100 per year in petrol costs. The path will be paved. Every year, at a cost of $7,500, the surface must be refinished. The road will be in use for the next 20 years. Determine if Tower City should construct the road. Money has an interest rate of 8%(ε = interest rate) Note: Show final answer in two decimal places. and complete solution a. The Net Present Worth of this project = $ Blank 1 b. The IRR of this project = Blank 2% c. The ERR of this project = Blank 3% d. Should the city build the bypass road? (type only Yes or No) = Blank 4