Reconsider Problem 30. [Parker County Community College (PCCC) is trying to determine whether to use no insulation or to use insulation that is either 1 inch thick or 2 inches thick on its steam pipes. The heat loss from the pipes without insulation is expected to cost $1.50 per year per foot of pipe. A 1-inch thick insulated covering will eliminate 89 percent of the loss and will cost $0.40 per foot.A 2-inch thick insulated covering will eliminate 92 percent of the loss and will cost $0.85 per foot. PCCC Physical Plant Services estimates that there are 250,000 feet of steam pipe on campus. The PCCC Accounting Office requires a 10 percent/year return to justify capital expenditures. The insulation has a life expectancy of 10 years. Determine which insulation (if any) should be purchased based on an incremental present worth analysis.

Reconsider Problem 30. [Parker County Community College (PCCC) is trying to determine whether to use no insulation or to use insulation that is either 1 inch thick or 2 inches thick on its steam pipes. The heat loss from the pipes without insulation is expected to cost $1.50 per year per foot of pipe. A 1-inch thick insulated covering will eliminate 89 percent of the loss and will cost $0.40 per foot.A 2-inch thick insulated covering will eliminate 92 percent of the loss and will cost $0.85 per foot. PCCC Physical Plant Services estimates that there are 250,000 feet of steam pipe on campus. The PCCC Accounting Office requires a 10 percent/year return to justify capital expenditures. The insulation has a life expectancy of 10 years. Determine which insulation (if any) should be purchased based on an incremental present worth analysis.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 20P: The Aubey Coffee Company is evaluating the within-plant distribution system for its new roasting,...

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3. Useful lives are equal to the study period At the Motorola plant in Mesa, Arizona, it is desired to determine whether oneinch-thick insulation or two-inch-thick insulation should be used to reduce heat loss from a long section of steam pipe. The heat loss from this pipe without any insulation would cost $2.00 per linear foot per year. The one-inch insulation will eliminate 88% of the heat loss and will cost $0.60 per foot. Two-inch insulation will eliminate 92% of the heat loss and will cost $1.10 per foot. The steam pipe is 1,000 feet in length and will last for10 years. MARR = 6% per year. Which insulation thickness should be recommended?
The heat loss through the exterior walls of a certain poultry processing plant is estimated to cost the owner $3,000 next year. A salesperson from Superfiber Insulation, Inc., has told you, the plant engineer, that he can reduce the heat loss by 80% with the installation of $18,000 worth of Superfiber now. If the cost of heat loss rises by $200 per year (uniform gradient) after the next year and the owner plans to keep the present building for 15 more years, what would you recommend if the interest rate is 10% per year?
Installing low thermal emissivity windows (low-e windows) on buildings can contribute to energy conservation. Installing low-e windows on a school building is estimated to cost $10,000. The windows are expected to last 6 years and have no salvage value at that time. The energy savings from the windows are expected to be $2,525 in the 1st year. After the 1st year, the savings are expected to increase by $125 each year due to escalating fossil fuel costs. MARR is 15% per year and annual worth is the preferred measure of economic worth. Which Excel® entry should you use to determine the annual worth of installing the low-e windows? -NPV (15 %,6,10000)+NPV( 15%,6,- NPV ( 15%,2525,25252525,2525,25252525)) O-PMT( 15%,6,10000) + PMT( 15 %,6,- NPV ( 15%, 0,125,2 125,3 125,4 125,5*125))+2525 O-PMT(15,6,10000)+PMT(15,6,PMT(15,0,125,2 125,3 125,4*125,5*125))+2525 -PMT(15%.6.10000)+PMT (15% , 6 , NPV ( 15%, 2525,2 2525,2525,2525,2525))
In a cold storage plant, it is desired to determine whether to use insulation two inches thick or three inches in insulating the walls of the cold storage warehouse. Heat absorbed through the walls without insulation would cost P96.00 per year per square meter. Two-inch insulation will cost P30.40 per square meter and will cut out 89% of the loss. Three-inch insulation will cut out92% of the loss and will cost P65.00 per square meter. Using life of 15 years for the insulation with no salvage value and a minimum attractive return of 8%, what thickness of insulation should be used?
5
An engineer is considering two different liners for an evaporation pond that will receive salty concentrate from a brackish water desalting plant. A plastic liner will cost $0.90 per square foot and will have to be replaced in 20 years when precipitated solids have to be removed from the pond using heavy equipment. A rubberized elastomeric liner is tougher and, therefore, is expected to last 30 years, but it will cost $2.20 per square foot. The pond covers 110 acres (1 acre = 43,560 square feet). Which liner is more cost effective on the basis of an annual worth analysis at an interest rate of 8% per year? Solve using (a) tabulated factors, and (b) a calculator.
MCQ'S: 26) Anderson Clayton will purchase a new pellet mill that will replace an older, less efficient mill. The new mill costs $360,000 and shipping costs are $10,000. Improving the steam lines to the new mill will cost an additional $22,000. The old mill has a book value of $25,000 and can be sold for $12,000. The installation of the new mill will cause inventories to increase by $8,000, accounts receivable will go up $20,000, and accounts payable will increase $10,000. If Anderson Clayton has a marginal tax rate of 40%, what is the NINV for the new mill? a.$412,800 b.$392,800 . c.$374,800 d.$398,000 27) According to Value Line, Bestway has a beta of 1.15. If 3-month Treasury bills currently yield 7.9% and the market risk premium is estimated to be 8.3%, what is Bestway's cost of equity capital? a.16.2% b.8.36% c.17.45% . d.9.55% 28) Determine the pure project…
am. 113.
The Department of Public Works is trying to decide between "patching" a road or repaving it completely. If the "patching" system is used, approximately 300 cubic meters of material will be required, at $25 per cubic meter (on site). Additionally, the berms will need to be re-constructed, which will cost $3000. The annual cost of routine maintenance of the "patched" road would be $4000. Repairs would only last 2 years, after which they would have to be re-made. The other alternative is for the department to repave the entire road, which would cost $65,000. This area would last 10 years if the road were maintained at a cost of $15000 per year, starting in 4 years. Regardless of which alternative is chosen, the road will be rebuilt within 10 years. If the interest rate is 13% per year, which alternative should the department select, based on present value?
A proposed building may be roofed in either composition roofing (C) or galvanized steel sheet (S). The composition roof costs $56,000 and is replaced every 5 years (assume at the same cost). The steel roof costs $68,000 but the useful life is very long. Neither roof has any salvage value, nor is maintenance needed. If the MARR is 10%, what minimum life must the steel roof have to make it the better alternative? (Report to the nearest whole year; don't bother interpolating.)
Hey I'm having trouble with this problem, I'm not sure if 48,000 is pv or fv also I'm not sure if what to do with annual maintenance cost either. "Esquire Company needs to acquire a molding machine to be used in its manufacturing process. Two types of machines that would be appropriate are presently on the market. Machine A could be purchased for $48,000. It will last 10 years with annual maintenance costs of $1,000 per year. After 10 years the machine can be sold for $5,000.Machine B could be purchased for $40,000. It also will last 10 years and will require maintenance costs of $4,000 in year three, $5,000 in year six, and $6,000 in year eight. After 10 years, the machine will have no salvage value. Assume an interest rate of 8% properly reflects the time value of money in this situation and that maintenance costs are paid at the end of each year. Ignore income tax considerations.Calculate the present value of Machine A & Machine B. Which machine Esquire should purchase?"
Could someone work through this problem and show how 261 is the right answer?