A company that manufactures magnetic flow meters expects to undertake a project that will have the cash flowsestimated.First cost, $-810,000Equipment replacement cost inyear 2, $-300,000Annual operating cost, $/yearSalvage value, $Life, years-860,000250.0004an interest rate of 10% per year, what is the equivalent annual cost of the project? Find the AW value using tabulated factors.e equivalent annual cost of the project is $-820000

Equivalent annual cost is that cost which includes the all cost including the cost of operating and…

Answered: ted. First cost, $ Equipment replaceme…

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

Section: Chapter Questions

Problem 1PS

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Two alternatives are being considered for installation. Which should be selected based on an interest rate of 5.6% per year ? Alternative A Alternative B First Cost, $ 135,000 462,000 Annual Operating Cost, $/yr 76,000 34,600 Salvage value, $ 71,200 n/a Life, years 9 ∞
None
Rework previous parts assuming they are annuities due. Present value of $800 per year for 14 years at 16%: $ Present value of $400 per year for 7 years at 8%: $ Present value of $900 per year for 7 years at 0%: $
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Q3: The following table gives the operation cost, maintenance cost and salvage value at the end of every year of a machine whose purchase value is 25,000$. Find the economic life of the machine assuming interest rate, i = 15%. End of Year (n) 1 2 3 4 5 6 7 8 9 10 Cost operation at the end of year ($) 3000 4000 5000 6000 7000 8000 9000 10000 11000 12000 Maintenance cost at the end of year ($) 300 400 500 600 700 800 900 1000 1100 1200 Salvage value ate end of the year ($) 9000 8000 7000 6000 5000 4000 3000 2000 1000 500
Last year Artworks, Inc. paid a dividend of $1.80. You anticipate that the company's growth rate is 4 percent and have a required rate of return of 10 percent for this type of equity investment. What is the maximum price you would be willing to pay for the stock? Round your answer to the nearest cent. $
Company A needs a trailer for business purposes Trailer costs 150k, lasts expected 10 years Salvage value of $12k Eff Tax rate = 35% Before tax borrowing cost = 10%pa Fully depreciate via straight line deciding between leasing trailer or borrow before purchasing, lease = $25k per year in advance every year. NPV of leasing Trailer?
Input area: Installation cost Pretax salvage value Operating cost per year Initial NWC Tax rate Discount rate *Depreciation straight-line over life Output area: Annual depreciation charge Aftertax salvage value OCF NPV $ SA SA SA GA $ 385,000 $ 60,000 $ 135,000 35,000 21% 10% ᏌᏊ Ꮚ Ꮚ $ 77,000 $ 47,400 $ 122,820 5
The equivalent annual worth of alternative A over an infinite time period is closest to:a. $-25,000b. $-27,200c. $-31,600d. $-37,100
An asset has the estimated salvage values for various lives, shown in the table below. For each possible life from 1 to 6 by 1, determine the capital recovery cost for MARR of 8%/year. EOY 0 1 2 3 4 5 6 NCF -$150,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 Estimated SV $150,000 $130,000 $110,000 $100,000 $90,000 $85,000 $82,000 Capital recovery cost with 1-year life $ Capital recovery cost with 2 years life $ Capital recovery cost with 3 years life $ Capital recovery cost with 4 years life $ Capital recovery cost with 5 years life $ Capital recovery cost with 6 years life $ Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±50.

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ted. First cost, $ Equipment replaceme year 2, $ Annual operating cos Salvage value, $ Life, years interest rate of 10% pe equivalent annual cost