Horizon Wireless must rebuild a cell tower. A tower made of normal steel (NS) will cost $30,000 to construct and should last 15 years. Maintenance will cost $1000 per year. If corrosion-resistant steel (CRS) is used, the tower will cost $36,000 to build, but the annual maintenance cost will be reduced to $250 per year. Determine the IRR of building the corrosionresistant tower. If Horizon requires a return of 9% on its capital projects,which tower should be chosen?
Horizon Wireless must rebuild a cell tower. A tower made of normal steel (NS) will cost $30,000 to construct and should last 15 years. Maintenance will cost $1000 per year. If corrosion-resistant steel (CRS) is used, the tower will cost $36,000 to build, but the annual maintenance cost will be reduced to $250 per year. Determine the IRR of building the corrosionresistant tower. If Horizon requires a return of 9% on its capital projects,which tower should be chosen?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Horizon Wireless must rebuild a cell tower. A tower made of normal steel (NS) will cost $30,000 to construct and should last 15 years. Maintenance will cost $1000 per year. If corrosion-resistant steel (CRS) is used, the tower will cost $36,000 to build, but the annual maintenance cost will be reduced to $250 per year. Determine the
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