A paper company paid $4,00,000 at the start of a project to clear an area of land and plant some youngpine trees. The trees will mature in 10 years, at that time what will be the value of forest?If these costs will be incurred for plantation and clear the land:i)ii)They required $20,000 at the start of every year for medicine and spray for the landSalaries of the gardeners’ $10,000 paid at the end of each yearRequired:What should be the value of the forest if interest rate is 15%?

The value of the land at the end of 10 years would the appreciation value at 15% plus the cost borne…

A paper company paid $4,00,000 at the start of a project to clear an area of land and plant some young pine trees. The trees will mature in 10 years, at that time what will be the value of forest? If these costs will be incurred for plantation and clear the land: i) They required $20,000 at the start of every year for medicine and spray for the land ii) Salaries of the gardeners’ $10,000 paid at the end of each year Required: What should be the value of the forest if interest rate is 15%?

A paper company paid $4,00,000 at the start of a project to clear an area of land and plant some young pine trees. The trees will mature in 10 years, at that time what will be the value of forest? If these costs will be incurred for plantation and clear the land: i) They required $20,000 at the start of every year for medicine and spray for the land ii) Salaries of the gardeners’ $10,000 paid at the end of each year Required: What should be the value of the forest if interest rate is 15%?

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 paper company paid $4,00,000 at the start of a project to clear an area of land and plant some young pine trees. The trees will mature in 10 years, at that time what will be the value of forest? If these costs will be incurred for plantation and clear the land i) They required $20,000 at the start of every year for medicine and spray for the land. ii) Salariesof the gardeners' $10,000 paid at the end of each year What should be the value of the forest if interest rate is 15%? Required: What should be the value of the forest if interest rate is 15%?
Garbage collection in the city are collected by garbage trucks which are operated by private contractor to ensure effective service to the public. One garbage truck will cost P3M with an annual maintenance cost of P50,000. The life of the truck is 5 years with a salvage value of P180,000. The contractor can hire a similar truck for P3400 a day. If money is worth 10% annually, how many days per year must the truck be used to warrant the purchase of the machine assuming it is used everyday for the whole year? Select the correct response: 158 221 239 200
Given a project with the following characteristics, answer the following questions: You are the project manager of a project to plant trees on the sidewalks of the local community. Your project is scheduled to last for 6 months. You are to plant (thirty) 30 trees each month. Each tree is planned to cost R1 000. It is now the last day of month 3. You have planted 80 trees and your CPI is 1.11. 1. What is the actual cost of the project right now? 2. What is the current schedule performance index (SPI) of the project? 3. How is the project currently performing in terms of budget and schedule? Motivate your answer. 4. What is the percentage of the project that is currently complete. What should be reported?
A company is considering to buy a new machine for the production of its product. Currently the company is producing 1,000 products per hour with 5 workers that are paid $10 per hour each. The price of the new machine under consideration is $22,000 with useful life of 10 years and the salvage value is estimated to be $500. The annual operating & maintenance cost of the new machine is $2,000 and requires one skilled operator, that will be paid from $24 per hour, and can produce 1,500 products per hour. If the company uses MARR of 8% p.a., answer the following: (a) What is the breakeven point? (use AW). (b) What is the interpretation of this breakeven point? Explain. (c) If the company needs 180,000 products per year, should they buy the machine? Show all work. (d) What should be the total annual operating & maintenance cost of the machine in order to breakeven at the production level of 200,000 products? Note: You should first define your variable.
A small utility company is considering the purchase of a powerdriven post hole digger. The equipment will cost $8,000 and have an estimated life of 8 years and a salvage value of $1,000 at that time. Annual maintenance costs for the digger are estimated to be 15% of the first cost regardless of its level of usage. Operations costs are $40 per day with an output rate of 25 holes per day. At present, holes are manually dug at a rate of 1.5 per day by a laborer whose marginal cost is $11.20 per day. Determine the break-even value in holes per year. MARR is 8%.
The Johnson Company pays $1700 a month to a trucker to haul wastepaper and cardboard to the city dump. The material could be recycled if the company were to buy a $48,000 hydraulic press baler and spend $21,000 a year for labor to operate the baler. The baler has an estimated useful life of 15 years and no salvage value. Strapping material would cost $1500 per year for the estimated 600 bales a year that would be produced. A wastepaper company will pick up the bales at the plant and pay Johnson $27 per bale for them. Use an annual cash flow analysis and an interest rate of 8% to recommend whether it is economical to install and operate the baler.
A contractor has purchased a small backhoe for $120,000 that he plans to use in excavating ditches for utilities construction. He plans to use the backhoe for 8 years and sell the used machine for $40,000. He must replace the tires on the backhoe after each 3,000 hours of use at a cost of $15,000. Annual operating and labor costs are estimated to be $20,000 per year. The contractor estimates that the backhoe will be used about 1,000 hours per year. If the minimum attractive rate of return is 12%; what is the hourly owning and operating cost for the backhoe? Please required urgent... Thank you
A food company needs $800,000 to purchase a new machine which will be used to peel potatoes. The system is expected to have an 8-year service life. 180,000 per year will be saved in labor and materials. However, it will require additional costs over eight years. The additional cost is 42,000 in year one. These expenses increase by 2% each year. Assuming a $20,000 salvage value at the end of year eight and a MARR=12% per year, use the NPW method to check whether the project is justifiable. Note: You must use (P/A1,g,i,N) formula while finding the present value of the geometric gradient series in Question 3. You would lose points in case you take each cash flow individually to time 0.
The Culinary Institute is considering a classroom remodeling project. The cost of the remodel would be $350,000 and will be depreciated over six years using the straight- line method. The model will acoomoodate five extra student per year. Additional information related to the project follows:Cost of the remodel project: $350,000 Useful life of project in years: 6 Annual number of extra students: 5 Annual tuition per student: $22,000 Before- tax incremental cost of a student: $2,000 Company's income tax rate: 20% Required rate of return: 12% Assuming a six- year time horizon, what is the internal rate of return of the remodeling project? Calculate using both present value factors and separately using Excel's IRR function. Please include formulas to show how you arrive at each solution! A) Annual cash flow: Revenue ? Less costs:Other than depreciation ? Depreciation ? Income before taxes ? Income tax expense ?…
The Department of Public Works is trying to decide between "patching" a road or repaving it completely. If the "patching" system is used, approximately 300 cubic meters of material will be required, at $25 per cubic meter (on site). Additionally, the berms will need to be re-constructed, which will cost $3000. The annual cost of routine maintenance of the "patched" road would be $4000. Repairs would only last 2 years, after which they would have to be re-made. The other alternative is for the department to repave the entire road, which would cost $65,000. This area would last 10 years if the road were maintained at a cost of $15000 per year, starting in 4 years. Regardless of which alternative is chosen, the road will be rebuilt within 10 years. If the interest rate is 13% per year, which alternative should the department select, based on present value?
A computerized machining center has been proposed for a small tool manufacturing company. If the new system, which costs $125,000, is installed, it will generate annual revenues of $100,000 and will require $20,000 in annual labor, $12,000 in annual material expenses, and another $8,000 in annual overhead (power and utility) expenses. A loan of $100,000 is borrowed from the bank for installation of the machining center which is repaid by equal annual repayments in 5 years at an interest rate of 8% compounded quarterly. Note that there is a working-capital requirement of $23,331 in year 0 and full recovery of the working capital at the end of year 5 for the machining center. The machining center would be classified as a seven-year MACRS property. If the asset is held for eight years, we can depreciate a seven-year property in respective percentages of 14.29%, 24.49%, 17.49%, 12.49%, 8.93%, 8.92%, 8.93%, and 4.46%. The company expects to phase out the facility at the end of five years,…
An excavator is purchased now with a cost of $200,000. The excavator will need major maintenance every year, with the first maintenance occurring at EOY 1. The cost of maintenance at EOY 1 is $20,000, and the cost increases by 2,000 each time it is performed. The life of the excavator is 20 years. At EOY 20, the excavator will be sold for $40,000. Nominal interest rate is given as 24% compounded monthly. Find the net present worth of this investment.

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