The cash flow of an energy management opportunity is estimated as follows: Initial cost:$12,000 Energy saving:$2,700/year for 12 years Maintenance cost:$1,200/year for 12 years Salvage value:$2,500@the end of 12 years If the interest rate is 10%, 1) What is the simple payback period (SPP) (in years)? (a)5.2 (b)4.2 (c)4.6 (d)8.0 2) With an annual discount rate is 10%, what is the discounted payback period (in years)? (a)9.5 b) 15.1 (c)8.1 (d) 16.9 (e) 6.5 3)With an annual discount rate is 10%, what is the benefit-cost ratio (BCR)? (Hint: Benefit = Annual saving-Maintenance; Cost= Initial investment - Salvage) (a) 1.04 (b) 0.80 (c) 1.25 (d) 1.12 (e) 1.43
The cash flow of an energy management opportunity is estimated as follows: Initial cost:$12,000 Energy saving:$2,700/year for 12 years Maintenance cost:$1,200/year for 12 years Salvage value:$2,500@the end of 12 years If the interest rate is 10%, 1) What is the simple payback period (SPP) (in years)? (a)5.2 (b)4.2 (c)4.6 (d)8.0 2) With an annual discount rate is 10%, what is the discounted payback period (in years)? (a)9.5 b) 15.1 (c)8.1 (d) 16.9 (e) 6.5 3)With an annual discount rate is 10%, what is the benefit-cost ratio (BCR)? (Hint: Benefit = Annual saving-Maintenance; Cost= Initial investment - Salvage) (a) 1.04 (b) 0.80 (c) 1.25 (d) 1.12 (e) 1.43
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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The cash flow of an energy management opportunity is estimated as follows:
Initial cost:$12,000
Energy saving:$2,700/year for 12 years
Maintenance cost:$1,200/year for 12 years
Salvage value:$2,500@the end of 12 years
If the interest rate is 10%,
1) What is the simple payback period (SPP) (in years)?
(a)5.2
(b)4.2
(c)4.6
(d)8.0
2) With an annual discount rate is 10%, what is the discounted payback period (in years)?
(a)9.5
b) 15.1
(c)8.1
(d) 16.9
(e) 6.5
3)With an annual discount rate is 10%, what is the benefit-cost ratio (BCR)? (Hint: Benefit = Annual saving-Maintenance; Cost= Initial investment - Salvage)
(a) 1.04
(b) 0.80
(c) 1.25
(d) 1.12
(e) 1.43
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