Some particulars for a project are as follows. Initial Capital Cost in year 0 ($Mn) Follow-up 'one-off' cost in year 1 ($Mn) Annual Operating Cost ($Mn/yr) Annual Benefits ($Mn/yr) Project Closure Cost, at end of project life ($Mn) Useful Life (years) Interest/Discount rate (percent) 1000 300 10% of capital cost 400 200 20 7

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Some particulars for a project are as follows.
Initial Capital Cost in year 0 ($Mn)
Follow-up 'one-off' cost in year 1 ($Mn)
Annual Operating Cost ($Mn/yr)
Annual Benefits ($Mn/yr)
Correct Answers
Project Closure Cost, at end of project life
($Mn)
Useful Life (years)
Interest/Discount rate (percent)
1000
300
10% of capital cost
400
2,391 (with margin: 5)
200
20
7
What is the Life Cycle Cost of the project - expressed in present value term?
(your answer must be rounded off to the nearest million dollars, i.e., no decimal places)
Transcribed Image Text:You Answered Some particulars for a project are as follows. Initial Capital Cost in year 0 ($Mn) Follow-up 'one-off' cost in year 1 ($Mn) Annual Operating Cost ($Mn/yr) Annual Benefits ($Mn/yr) Correct Answers Project Closure Cost, at end of project life ($Mn) Useful Life (years) Interest/Discount rate (percent) 1000 300 10% of capital cost 400 2,391 (with margin: 5) 200 20 7 What is the Life Cycle Cost of the project - expressed in present value term? (your answer must be rounded off to the nearest million dollars, i.e., no decimal places)
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