Energy efficiency of an equipment can be improved by 20% through enhanced maintenance leading to a fuel saving of Rs 250000/- per annum for 10 years. What is the maximum allowable investment on the project? Take interest rate as 12%.

Q: A new project will have an intial cost of $12,000. Cash flows from the project are expected to be…

A: Payback period is a financial metric used to evaluate the length of time required for an investment…

Q: Consider a new machine at a bottling plant that has a first cost of $100000, operating and…

A: All values shouldbe converted to Present value first before summing up all costs. FC and OM are…

Q: Assume cost is $10,000 each year, benefit is $8,000 each year, interest rate is 2%. calculate NPV if…

A: NPV refers to the net present value of a project. NPV is an important capital budgeting tool. As per…

Q: The annual maintenance costs of a tunnel, which is considered to have an eternal life, are worth 500…

A: Total capitalised cost include the initial cost of investment and the present value of annual cost…

Q: Following table shows the initial investment required in and cash flow (return) from a project…

A: Capital Budgeting Techniques are used to choose the most profitable investment alternative. Based on…

Q: Calculate the internal rate of return for a project that requires $100,000 initial investment and…

A: Internal Rate of Return is a capital budgeting technique used to evaluate the viability of the…

Q: An untreated electric wooden pole that will last 15 years under a certain soil condition costs…

A: Time value of money concept is used to evaluate projects in the form of various types of investment.…

Q: A new project will have an intial cost of $50,000. Cash flows from the project are expected to be…

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Q: There is a project that requires an investment of 20 thousand usd and its expected benefit is 7,500…

A: Internal rate of return: The internal rate of return is the rate at which the net present value of…

Q: Consider a new machine at a packaging plant that has a first cost of $100000, operating and…

A: The annual cost of owning, operating, and maintaining an asset is the same as the annual cost of…

Q: Dhofar Energy Company is installing new equipment at a cost of 200000 OMR. Expected cash flows from…

A: Disocunted payback period is a technique used to determine the number of years it would take to…

Q: A project requires a $2 million investment in net working capital (NWC) today, and will be fully…

A: Present value refers to value today. Present value is an important concept in which different cash…

Q: Replacing old equipment at an immediate cost of $70,000 and an additional outlay of $10,000 three…

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Q: A company is evaluating a project with a useful life of 12 years that requires an investment of…

A: Useful Life of project is 12 years Required investment per year in the begining of year 1 to 4 is…

Q: Project A has a NPV of $100 and will last for 10 years. Project B has an NPV of $75 and will last…

A: Equivalent annual cost is the cost of operating and maintaining an asset annually. It is also called…

Q: Cooper Industries is considering a project that would require an initial investment of P235,000. The…

A: Discount factor = initial investment / Annual cost savings = P235,000/P70,110  = 3.352

Q: onsider the following project. Costs: $100,000, at time t = 0. $45,000, at time t = 4. Income: Three…

A: The question is based on the concept of calculating the future value of cash flows in a project at…

Q: A project requires a $180k investment and will generate five annual cash flows of $60k starting next…

A: To calculate the NPV of the project, you need to use the following formula: NPV = CF1 / (1 + r)^1 +…

Q: An equipment with an estimated lifespan of 10 years is to be bought for Php 1,500,000. It will…

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Q: Improvements with an initial investment cost of 67,000 TL will be made in an assembly line. Yearly…

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Q: An equipment with an estimated lifespan of 10 years is to be bought for Php 1,500,000. It will…

A: Initial Investment Cost (Year 0) I = Php 1,500,000Annual Revenue A= Php 400,000Annual Operating and…

Q: Compare the following alternatives based on the rate of return analysis assuming that the MAAR is…

A: Initial costs  A = 60 B = 90 Annual operation and reparation  A = 15 + 5 = 20 B = 8 +2 = 10 This…

Q: Calculate the net present value of a project which requires an initial investment of ₱1,000,000 with…

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Q: The initial investment cost of a project is 81.500 TL and its annual income is 20.000 TL / year. If…

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Q: A project costs $1200.00 at the end of the 1st year and the yearly cost increases by $400.00 every…

A: EUAC = r*NPV/1-(1+r)^(-n) here r = 8% and n is 4 years Let us first compute the NPV: Year Costs…

Q: A certain project has a payback of 8 years. The project will generate cash earnings after taxes as…

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Q: You want to invest in a project that costs $4125.  The initial (Date 0) CF of the project is $75…

A: NPV of a project = Initial Outflow - Present value of future inflow of cash Given  Initial Outlay…

Q: Project A has a NPV of $100 and will last for 10 years. Project B has an NPV of $75 and will last…

A: Equivalent annual cost refers to the cost incurred for owning, operating, and the maintenance of an…

Q: What is the NPV of a project that COSTS $0.5M today and cash inflows $5,000 monthly, paid annually,…

A: Initial Cost = i = $500,000Monthly Cash Flow = cf = 5000 * 12 = $Time = t = 10 Cost of Capital = r =…

Q: A project has a rate of return of 23%. What is the future value of the project if the investment…

A: Future value is the future worth of cash flows that have occurred in the present or past.

Q: A project having a life of one year is started with initial investment of Rs. 120 lakhs with 12%…

A: The initial investment is Rs. 120 Lakhs. The initial cost of capital is 12%. The NPV is Rs. 15 Lakhs…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.