Miner's Mexican Grill Inc plans to open its 100th restaurant by the end of next year. The new restaurant will require an intial investment of $300,000 and an annual operating cost of $31,000. It will have a $62,000 salvage value after 6 years. The company also estimates that the new restaurant will bring in revenue of $43,400 each year. Determine the Annual Worth of the investment if the company's minimum attractive rate of return is 13% per year. AW $35,207; therefore, the investment should be rejected. AW $25 207, therefore, the investment should be accepted AW $55,207, therefore, the investment should be rejected O AW= $55,207, therefore, the investment should be rejected

Miner's Mexican Grill Inc plans to open its 100th restaurant by the end of next year. The new restaurant will require an intial investment of $300,000 and an annual operating cost of $31,000. It will have a $62,000 salvage value after 6 years. The company also estimates that the new restaurant will bring in revenue of $43,400 each year. Determine the Annual Worth of the investment if the company's minimum attractive rate of return is 13% per year. AW $35,207; therefore, the investment should be rejected. AW $25 207, therefore, the investment should be accepted AW $55,207, therefore, the investment should be rejected O AW= $55,207, therefore, the investment should be rejected

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Most likely estimates for a project are as follows. Click the icon to view the relationship between…

A: We need to determine if an initial investment of $5,250 makes a project economically viable given…

Q: A company predicts they will make $1,321 per year over the next 19 years if they spend $2,497 on a…

A: Present value is the value of investment in today's dollar. Future value is the value of investment…

Q: a. What is the present worth of this investment?

A: 1. Calculate the existing fee of the loan bills. The loan amount is 1/4th of the purchase charge, or…

Q: No written by hand solution Manager of a computer company plans to spend on new hardware $1.0…

A: Cash flow in economics refers to the movement of money in and out of a business or individual's…

Q: John is evaluating his truck inventory. One three year old vehicle has a book value of $22 500.…

A: Purchase Price = 32000Current book value = 22500 Maintenance cost = 1100 per year Maintenance cost…

Q: The survey firm of Layer, Anderson, and Pope (MAP) LLP is considering the purchase of a piece of new…

A: The following values are given in the question:

Q: Current Attempt in Progress Galvanized Products is considering purchasing a new computer system for…

A: The value that represents the aggregation of all the cash flows related to the current value of the…

Q: You have an asset with a cost of investment (I) of $10,000 with a useful life (N) of 5 years, and a…

A: Given Initial investment I=$10,000 Salvage value (S)=$2000 Life of asset (N)=5 years Required:…

Q: Lesco Chemical is considering two processes for making a cationic polymer. Process A has a first…

A: here we calculate the AOC of the both investment and choose the best one so here calculation as…

Q: Please help

A: Hey, Thank you for the question. According to our policy we can only answer up to 3 subparts per…

Q: Lifetime savings accounts, known as LSAS, allow people to invest after - tax money without being…

A: The formula for the future value of an annuity is:Where:FV is the future value of the annuity,P is…

Q: 20 years later, Alex is has $1,000,000 in his investment account. He plans to spend $200,000 each…

A: Amount in account = $1,000,000 The amount he will spend each year =$200,000 Interest = 10%

Q: Given the data for two different alternatives in the table below, determine the best alternative…

A: Calculate the rate of return (ROR) for each alternative individually.Compare the ROR of each…

Q: A project with an infinite life has the following details: Initial cost $6 million Annual operating…

A: A capitalized cost is an expense added to the cost basis of a fixed asset on a company's balance…

Q: ATCF9 = $ ATCF10 = $ ATCF11 = $ ATCF12 = $ b. Determine the PW of the after-tax cash flows. PW $T =…

A: Annual worth or AW is referred to as the easy way of understanding the annual amount, for…

Q: Maggie invested $5000 in the stock market. After 17 months, the value of her stock was increased to…

A: Given: Present value(PV)=$5000 Future value(FV)=$6400 Number of years(n)=17 To find: The nominal…

Q: Two alternatives are considered for a project that lasts for 3 years. Alternative A has an initial…

A: Project: It refers to any deal that helps a business grow. Any project needs investment due to which…

Q: Galvanized Products is considering the purchase of a new computer system for its enterprise data…

A: a. Annual worth (AW) of investment is calculated as follows. Loan amount =1000004=25000Annual loan…

Q: Fenrik thinks it might be a good idea to buy a house to live in while he's studying at SAIT. The…

A: Given: Initial cost = $150,000Monthly revenue = $1,750Years = 3 years or 36 monthsSalvage value =…

Q: Problem 03.019 Annual Worth Calculations Find the value of x that makes the equivalent annual worth…

A: Interest rate is the rate which is cost for borrower and it is reward for lender. It is the rate of…

Question

Miner's Mexican Grill Inc. plans to open its 100th restaurant by the end of next year. The new restaurant will require an initial investment of $300,000 and an annual operating cost of $31,000. It will have a $62,000 salvage value after 6 years. The company also estimates that the new restaurant will bring in revenue of $43,400 each year. Determine the Annual Worth of the investment if the company's minimum attractive rate of return is 13% per year.

- AW= -$35,207; therefore, the investment should be rejected.
- AW= -$26,207; therefore, the investment should be accepted.
- AW= -$55,207; therefore, the investment should be rejected.
- AW= $55,207; therefore, the investment should be rejected.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Galvanized Products is considering the purchase of a new computer system for their enterprise data management system. The vendor has quoted a purchase price of $80,000. Galvanized Products is planning to borrow 1/4th of the purchase price from a bank at 19% compounded annually. The loan is to be repaid using equal annual payments over a 3-year period. The computer system is expected to last 5 years and has a salvage value of $7,000 at that time. Over the 5-year period, Galvanized Products expects to pay a technician $29,000 per year to maintain the system but will save $58,000 per year through increased efficiencies. Galvanized Products uses a MARR of 17%/year to evaluate investments. What is the external rate of return of this investment?
Annual thermal loss through the pipe lines of a factory is estimated to be $412 in terms of wasted energy. A new anti-heating technology can reduce the energy loss by 93% and costs for $1232. Although this new technology has no salvage value but it helps the factory to save much energy for upcoming 8 Years. Identify the present worth of the entire investment if the market rate is 10%.
answer as soon as possible
Kim has $35057 to invest for 10 years. She has the following options: [A]term deposit at 5% compounded annually; [B] Shares, paying a rate of 4.98% per annum with dividend paid quarterly; and [C] A building society account, paying a return of 5.06% per annum with monthly rests. Advise Kim on which option to take if all the investments are equally secure. Calculate all the resulting values per situation
Carlisle Company has been cited and must invest in equipment to reduce stack emissions or face EPA fines of $16,500 per year. An emission reduction filter will cost $75,000 and have an expected life of 5 years. Carlisle's MARR is 10%/year. Part a What is the future worth of this investment? $
A firm urgently needs a large printer and will either lease a printer at an end-of-year cost of $ 5000 for a 6 year period, or they will purchase the printer at an initial cost of $60,000. If purchased, the printer will have a zero salvage value at the end of 6-years life. No other costs are to be considered. MARR is 5%. What is the best investment decision on the basis of the internal rate of return. a. IRR could not be calculated due to no change in cashflow sign b. Negative IRR is not justified and is not applied here to make a proper decision c. Lease d. Buy
You are planning to purchase equipment that costs Rs. 30,000 and is expected to last 12 years with a Rs. 3,000 salvage value. The annual operating expenses are expected to be Rs. 9,000 for the first 4 years but owing to decreased use, the operating costs will decrease by Rs. 400 per year for the next 8 years. MARR is 20%. Approximately what will the present worth of this investment be? Select the value closest to your answer a) Rs. 61,000 b) Rs. 67,000 c) Rs. 72,000 d) Rs. 75,000
A company is considering establishing a new machine to automate a meatpacking process. The machine will save $59,350 in labor annually. The machine can be purchased for $271,296 today and will be used for 8 years. It has a salvage value of $11,071 at the end of its useful life. The new machine will require an annual maintenance cost of $9,594. The corporation has a minimum rate of return of 9.4%. Calculate the NPW.
Galvanized Products is considering the purchase of a new computer system for their enterprise data management system. The vendor has quoted a purchase price of $100,000. Galvanized Products is planning to borrow 1/4th of the purchase price from a bank at 15% compounded annually. The loan is to be repaid using equal annual payments over a 3-year period. The computer system is expected to last 5 years and has a salvage value of $5,000 at that time. Over the 5-year period, Galvanized Products expects to pay a technician $25,000 per year to maintain the system but will save $55,000 per year through increased efficiencies. Galvanized Products uses a MARR of 18%/year to evaluate investments. what is the annual worth of the investment?