5. Use the provided chart to solve this problem. factor namesingle paymentcompound amountsingle paymentpresent worthuniform seriessinking fundcapital recoveryuniform seriescompound amountuniform seriespresent worthuniform gradientpresent worthuniform gradientfuture worthuniform gradientuniform seriesconvertsP to FF to PF to AP to AA to FA to PG to PG to FG to Asymbol(F/P, i%, n)(P/F, 1%, n)(A/F, i%, n)(A/P, i%, n)(F/A, 1%, n)(P/A, i%, n)(P/G,i%, n)(F/G,1%, n)(A/G, i%, n)formula(1 + i)"(1 + i)-¹i(1 + i)" - 1i(1+i)"(1+i)n-1(1+i)n-1i(1+i)n-1i(1+i)n1-i(1+i)n-11² (1+i)nni(1+i)n(1+i)n-1nin(1+i)n-1 5. An industrial firm must pay a local jurisdiction the cost to expand its sewagetreatment plant. In addition, the firm must pay $12,000 annually toward the plantoperating costs. The industrial firm will pay money into a fund, which earns 5% peryear, to pay its share of the plant operating costs forever. What is the amount to bepaid into the fund?

The forever cost will be perpetual annuity and value would be the present value of perpetuity based…

factor name single payment compound amount single payment present worth uniform series sinking fund capital recovery uniform series compound amount uniform series present worth converts P to F F to P F to A P to A A to F A to P symbol (F/P, 1%, n) (P/F, 1%, n) (A/F, 1%, n) (A/P,1%, n) (F/A, 1%, n) (P/A,1%, n) formula (1+i)n (1+1)-" (1+i)n-1 i(1+i)" (1+i)n-1 (1+1)-1 (1+i)"-1 i(1+i)

factor name single payment compound amount single payment present worth uniform series sinking fund capital recovery uniform series compound amount uniform series present worth converts P to F F to P F to A P to A A to F A to P symbol (F/P, 1%, n) (P/F, 1%, n) (A/F, 1%, n) (A/P,1%, n) (F/A, 1%, n) (P/A,1%, n) formula (1+i)n (1+1)-" (1+i)n-1 i(1+i)" (1+i)n-1 (1+1)-1 (1+i)"-1 i(1+i)

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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Similar questions

Part of the income that a machine generates is put into a sinking fund to pay for replacement of the machine when it wears out. If $5,000 is deposited every year at 7% interest compounded annually, how many years must the machine be kept before a new machine costing $55,000 can be purchased?
The government has two (2) plans to deal with their water supply problem in Zamboanga. Option 1 is to build a complete water pumping plant costing P 2 Billion, which would meet all needs during the 1st 40 years. Annual maintenance costs are estimated to be at P 20M for the 1st 23 years and P 24968327 for the succeeding years, which is the difference between 40 years and 23 years. Option 2 is to build a partial water pumping plant at a cost of P 1.25 Billion, which would be sufficient for the 1st 15 years. At the end of 15 years, the pumping plant will be completed at an estimated cost of P 1.5 Billion. Annual maintenance cost is P 1.5 Million during the 1st 15 years and P3 Million for the succeeding 15 years. At 20% cpd.-a., what is the Present Value of Option 1?
$100,000 of annual repair is needed to maintain a tunnel. if the interest rate earned on funds held by the city is 7% per year, What is the amount needed today to maintain the tunnel indefinitely (i.e. perpetual basis)?
The government decides to build a bridge, costing $100 million. A plan has to be made to raise funds for future maintenance costs, which is estimated to be $2 million annually. Assuming that the government can create a trust fund that earns 8% interest annually, how much has to be raised now to cover the annual maintenance costs? O 50 million O 75 million O The fund raised will be insufficient to cover costs O 25 million O 125 million
The Transportation Service Directorate of a Municipality wants to purchase a newsoftware system to charge and track toll fees. The director wants to know the total capitalized cost ofthe software system. The system has an initial installment cost of 150 000 pbr and an additional cost of50 000 pbr after 10 years. Annual software maintenance cost is 8000 pbr and starts at year five. Inaddition, there is expected to be a recurring major upgrade cost of 15000 pbr every 13 years. Assumethat i=5% per year. If the new system will be used for the indefinite future, draw the cash flowdiagram and find the capitalized cost of the investment.
A city wants to set aside enough money to build, operate, and renovate a sewage treatment plant in perpetuity. An engineering company estimates that the plant will cost an immediate $20 million to build and will require $5 million every 20 years to replace major equipment and $10 million every 50 years to pay for the major structural renovation. It is estimated that operation and maintenance costs will be $1.5 million every year. What amount will the city need to set aside? Interest earned on the annuity is 7%.
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The city is building bridge that will cost 1.2 million dollars today and $25,000 per year to maintain. How much money needs to be invested today at a 10% interest rate to ensure the city has the payments to begin and maintain the project?
A newly constructed bridge costs $10,000,000. The same bridge is estimated to need renovation every 10 years at a cost of $1,000,000. Annual repairs and maintenance are estimated to be $100,000 per year.(a) If the interest rate is 5%, determine the capitalized-equivalent cost of the bridge.{b) Suppose that the bridge must be renovated every 15 years, not every10 years. What is the capitalized cost of the bridge if the interest rate is thesame as in (a)?(c) Repeat (a) and (b) with an interest rate of 10%. What can you say about the effect of interest on the results?
A toy manufacturer is considering the installation of a new process machine for the toy manufacturing facility. The machine costs $350,000 installed. wi ll generate additional revenues of $120,000 per year and will save $50,000 per year in labor and material costs. The machine will be financed by a $250,000 bank loan repayable in three equal annual principal installments plus 9% interest on the outstanding balance. The machine will be depreciated by seven-year MACRS. The useful life of this processing machine is 10 years at which time it will be soldfor $20,000. The combined marginal tax rate is 40%.(a) Find the year-by-year after-tax cash flow for the project.(b) Compute the IRR for this investment.(c) At MARR= 18%, is this project economically justifiable?
Please write the CBA analysis for these two options Option A requires the purchase of a garbage collection vehicle that needs a two-person crew. The vehicle will cost $60,000 and each worker will be paid $20,000 a year. The city would pick up 400 tons of garbage annually, and for each ton of garbage collected, it would charge a $400 fee. The city would have annual revenue of $160,000 (400 × $400) from this operation. +Please fill in the correct answer in each blank provided below. Project A. NPV Present value of Benefits Present value of Costs

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