A steel pedestrian overpass must either be reinforced or replaced. Reinforcementwould cost $25,000 and would make the overpass adequate for an additional 6years of service. If the overpass is torn down now, the scrap value of the steelwould exceed the removal cost by $15,000. If it is reinforced, it is estimated that itsnet salvage (market) value would be $18,000 at the time it is retired from service.A new pre-stressed concrete overpass would cost $140,000 and would meet theforeseeable requirements of the next 40 years. Such a design would have no scrapvalue or market value. It is estimated that the annual expenses of the reinforceoverpass would exceed those of the concrete overpass by $3,200. Assume thatmoney costs 8% per year, what would you recommend?3.

Given, Interest Rate= 8% Cost= $25,000 Initial Cost= $3,200 Salvage Value= $18,000 Annuity Factor is…

Answered: removal cost by $15,000. If it is…

removal cost by $15,000. If it is reinforced, et) value would be $18,000 at the time it is concrete overpass would cost $140,000 ements of the next 40 years. Such a designv

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

4.) Two mutually exclusive alternative public works projects are under consideration. Their respective costs and benefits are included in the table below. Project A has an anticipated life of 35 years, and the useful life of Project B has been estimated to be 25 years. If the interest rate is 9%, which, if either, of these projects should be selected? Capital investment Annual oper. & maint. costs Annual benefit Useful life of project (years) PROJECT A 375,000 60,000 122,500 35 PROJECT B 312,500 55,000 115,000 25
Hansaben
expense of $500. Consider a yearly Two machines are evaluated for a new project, consider a yearly interest rate of 6% and the information described in the following table. Determine EUAC for both alternatives and determine the best option. Purchase cost Salvage value Duration Machine A Machine B $10,000 $15,000 $1,250 $1,950 5 years 10 years 11 13 L
A highway is to be built connecting Maud and Bowlegs. Route A follows the old road and costs $4 million initially and $210,000/year thereafter. A new route, B, will cost $6 million initially and $180,000/year thereafter. Route C is an enhanced version of Route B with wider lanes, shoulders, and so on. Route C will cost $9 million at first, plus $260,000 per year to maintain. Benefits to the users, considering time, operation, and safety, are $500,000 per year for A, $850,000 per year for B, and $1,000,000 per year for C. Using a 7% interest rate, a 15-year study period, and a salvage value of 50% of first cost, determine which road should be constructed.
Show step by step
The Dry Dock is considering a project with an initial cost of $107,770 and cash inflows for years 1 to 3 of $37,200 $54,600 and $46,900 respectively. What is the IRR?
K A highway bridge is being considered for replacement. The new bridge would cost $X and would last for 24 years. Annual maintenance costs for the new bridge are estimated to be $27,000. People will be charged a toll of $0.22 per car to use the new bridge. Annual car traffic is estimated at 360,000 cars. The cost of collecting the toll consists of annual salaries for six collectors at $9,000 per collector. The existing bridge can be refurbished for $1,400,000 and would need to be replaced in 24 years. There would be additional refurbishing costs of $80,000 every five years and regular annual maintenance costs of $17,000 for the existing bridge. There would be no toll to use the refurbished bridge. If MARR is 10% per year, what is the maximum acceptable cost (X) of the new bridge? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10per year. Choose the correct answer below. .... A. The maximum acceptable cost of the new bridge is $1,668,576.…
A community is looking to build a dam over a stretch of river that is currently being used for recreation. The dam will generate electricity. The dam will have a useful life of 50 years after which its reservoir will be full of sediment and the dam will need to be removed. The following are the characteristics of the dam:Initial cost: $350,000,000Electricity produced: 200,000 MWh per year at $150/MWh Value of recreation lost: $20,000,000 per year a. If the social discount rate is a constant 2% per year, is the dam a good idea? Show your work and explain your rationale.
You are considering the following project. What is the NPV of the project? WACC of the project: 0.10 Revenue growth rate: 0.05 Tax rate: 0.40 Revenue for year 1: 13,000 Fixed costs for year 1: 3,000 variable costs (% of revenue): 0.30 project life: 3 years Economic life of equipment: 3 years Cost of equipment: 20,000 Salvage value of equipment: 4,000 Initial investment in net working capital: 2,000
V3. A school district considers two alternative plans for an athletic stadium. An engineer makes the following cost estimates for each: Concrete Bleachers. First cost, $350,000. Life is 90 years. Annual maintenance cost $2,500. Wooden Bleachers on Earth Fill. First cost, $200,000. Life is 90 years. Painting cost $12,000 every 10 years. New seats costs $40,000 every 15 years and new bleachers cost $100,000 every 30 years (don’t include replacing the bleachers in year 90). Compare equivalent uniform annual costs for a 90-year period using i = 7% compounded annually. (Which one would you choose?)
Perit Industries has $155,000 to invest in one of the following two projects: Cost of equipment required Working capital investment required Annual cash inflows Salvage value of equipment in six years Life of the project Project A $ 155,000 $ 25,000 $ 8,600 6 1. Net present value project A 2. Net present value project B 3. Which investment alternative (if either) would you recommend that the company accept? X Answer is complete but not entirely correct. Project B $0 $ 155,000 $ 40,000 years The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries' discount rate is 14%. Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: 1. Compute the net present value of Project A. Note: Enter negative values with a minus sign. Round your final answer to the nearest whole dollar amount. 2. Compute the net present value of Project B. $(53,971) 70,527 X Project B $0…
Consider the relative costs of a timber pedestrian bridge and a steel one; their initial capital costs, annual OMR costs and useful lives are given below: Initial capital cost Annual OMR cost Life span Timber Bridge $500,000 $30,000 15 years Steel Bridge $700,000 $5000 30 years Find the alternative of the least overall costs (use i = 8%). Use both present worth and annual worth methods.