If you invest $5,095 in a long-term venture, you will receive $1,000 per year forever. Assuming your interest rate is 8% per year, what is the capitalized worth ofyour investment?Choose the closest answer below.OA. The capitalized worth of your investment is $7,836.OB. The capitalized worth of your investment is $7,405.OC. The capitalized worth of your investment is $4,169.OD. The capitalized worth of your investment is $7,789.

The objective of this question is to calculate the capitalized worth of an investment that provides…

Answered: If you invest $5,095 in a long-term…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The tree diagram in figure below describes the uncertain cash flows for an engineering project. The analysis period is two years, and MARR = 12% per year. Based on this information, a. What are the E(PW), V(PW), and SD(PW) of the project? b. What is the probability that PW≥ 0? Click the icon to view the tree diagram. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 12% per year. a. Calculate the E(PW), V(PW), and SD(PW) of the project. E(PW) = $ (Round to the nearest dollar.) More Info 0 -$29,000 0.2 0.6 0.2 Time Period 1 $5,500 $11,000 $17,500 0.1 0.1 0.8 0.1 0.7 0.2 0.2 0.3 0.5 2 $17,200 $20,200 $24,800 $20,100 $24,600 $29.300 $21,900 $28,000 $31,100 C Q - X More Info N 1 2 3 4 5 Discrete Compounding; i = 12% Compound Amount Factor To Find F Given A FIA 1.0000 2.1200 3.3744 4.7793 6.3528 Single Payment Compound Amount Factor To Find F Given P F/P 1.1200 1.2544 1.4049 1.5735 1.7623 Present Worth Factor To Find P Given F P/F 0.8929 0.7972…
What is the rate of return for the following incremental analysis. Investment 1 2 Initial Investment $29,857 $40,955 Annual Return $14,657 $13,650 Salvage Value $29,857 $40,955
Today, you have $35,000 to invest. Two investment alternatives are available to you. One would require you to invest your $35,000 now; the other would require the $35,000 investment two years from now. In either case, the investments will end five years from now. The cash flows for each alternative are provided below. Using a MARR of 13%, what should you do with the $35,000 you have? Click the icon to view the alternatives description. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 13% per year. The FW of the Alternative 1 is $ (Round to the nearest dollar.) More Info Year OT N345 0 1 2 Alternative 1 - $35,000 $15,000 $15,000 $15,000 $13,000 $13,000 Alternative 2 $0 $0 - $35,000 $16,500 $16,500 $16,500 0 X
. A construction company is considering two possibilities for warehouse operations. Proposal 1 would require the purchase of a forklift for $5,000 and 500 pallets that cost $5 each. The average life of a pallet is assumed to be 2 years. If the forklift is purchased, the company must hire an operator for $9,000 annually and spend $600 per year on maintenance and operation. The life of the forklift is expected to be 12 years with a $700 salvage value. Alternatively, proposal 2 requires that the company hire 2 men to operate power driven hand trucks at a cost of $7,500 per man. One hand truck will be required at a cost of $900. The hand truck will have a life of 6 years with no salvage value. If the company's minimum attractive rate of return is 12%, which alternative should be selected? Use the annual equivalent method.
Suzy's Temporary Employee (STE) business, located in a big city, can do an online criminal background check in-house for $2.78 per search with a fixed cost of $32,000. A third-party online security firm offered to do a similar security search for $7.00 per person with an annual service contract with STE. If STE's forecast is 3,000 searches next year, should STE continue to do the search in-house or accept the third-party offer? Use the Excel template Break-Even determine the best decision. Round your answer for the breakeven quantity to the nearest whole number and round your answer for the amount of saving/loss to the nearest dollar. searches Breakeven quantity: Since the demand forecast of 3,000 searches is-Select-than the breakeven quantity, STE -Select- + outsource the work. STE -Select- + $ by outsourcing.
You operate your own small building company and have decided to bid on a government contract to build a pedestrian walkway in a national park during the coming winter. The walkway is to be of standard government design and should involve no unexpected costs. Your present capacity utilization rate is moderate and allows sufficient scope to understand this contract, if you win it. You calculate your incremental costs to be $268,000 and your fully allocated costs to be $440,000. Your usual practice is to add between 60% and 80% to your incremental costs, depending on capacity utilization rate and other factors. You expect three other firms to also bid on this contract, and you have assembled the following competitor intelligence about those companies. Issue Rival A Rival B Rival C Capacity Utilization At full capacity Moderate Very low Goodwill Considerations Very concerned Moderately concerned Not concerned Production Facilities Small and inefficient…
Country X typically has a high interest rate, and its currency is expected to strengthen against the dollar over time. Country Y typically has a low interest rate, and its currency is expected to weaken against the dollar over time. Both countries have imposed a “blocked funds” restriction over the next four years on the two subsidiaries owned by a U.S. firm. Which subsidiary will be more adversely affected by the blocked funds, assuming that the MNC has only limited opportunities for corporate expansion in both countries?
Two alternative investments are being considered. Design A has an initial cost of $3 million and annual cost of 135,000 dollars per year. Design B has an initial cost of $3.7 million and annual cost of 70,000 dollars per year. What is the rate of return of design B as compared to design A? Hint it is between 5% and 10%. MY Answer is 9.29 % is it correct?
You are being asked to evaluate the worthiness of an investment that requires you to spend $100,000 today in return for receiving $30,000 each year for seven years, beginning four years from now. Which of the following statements is TRUE If the MARR = 10%, I would conclude that this is a profitable investment. Present Worth = $30,000 X 7 - $100,000. If the MARR = 10%, I would conclude that this is not a profitable investment.
If that 30% return on investment (ROI) occurs over a decade, r = .55 and n = 10, so the annualized rate of return is 0.0653 0.02658 0.0554 0.0201
Assume a pool of 115 people in an insurance pool (a group of people insured through community rating). It is estimated that a small number in the pool will have significant pre- existing conditions as indicated in the table. Based on the age of these 115 people, the insurance company estimates the following distribution of health care claims (which includes necessary profit and administrative costs of the insurance company). Number of Insured Antidipated Heath Costs/Year/Person $1,400 $1,500 $1,600 $1,700 $1,800 $1,900 $2,000 $2,100 $2,200 $2.300 $2,400 $2,500 $2,700 $2,000 $2,900 $3,000 $3,100 $3.200 $3.300 $4,000 57,00 $10,000 Everyone joins the poal ad pays the necessary premum in the first year. The clams experience of the customers is faund to be generaly consstent with expeclations of the insurance company. A) What would be the premium In the third year if there is no inflation, based on the company's oxperience from the past year? B) If those customers who have anticipated…
Hollygan Co. must choose between gas-powered and an electric-powered forklift truck for moving materials in its factory. Because both forklifts perform the same function, the firm will choose only one. (They are mutually exclusive investments.) The electric-powered truck will cost more, but it will be less expensive to operate; it will cost $110,000, whereas the gas powered truck will cost $40,000. The required rate of return that applies to both investments is 14 percent. The life for both types of truck is estimated be 12 years, during which time the net cash flows for the electric-powered truck will be $23,500 per year and those for gas-powered truck will be $10,000 per year. Calculate the NPV and IRR for each type of truck, and decide which to recommend. (Written work shown please)

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