The heat loss through the windows of a home is estimated to cost the homeowner $338 per year in wastedenergy. Thermal windows will reduce heat loss by 92% and can be installed for $1444. The windows willhave no salvage value at the end of their estimated life of 12 years. Determine the net present equivalentvalue of the windows if the interest rate is 9%.S

The Net Present Value (NPV) is employed to evaluate a sequence of cash flows occurring at different…

Answered: The heat loss through the windows of a…

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 average annual electricity consumption for a single-family house is 5000 kWh with the cost per hour extracted from their bill to be $0.17 / h. you suggested a PV system that will reduce the consumption to 25% of the original consumption. The system will have initial cost after all incentives of $9,000 with zero salvage value at the end of the service life. Using 25 years analysis period and 3% interest rate, find the following for the 75% saving resulted from the new system. Use the attached excel sheet for your calculations. 1. Present worth 2. Simple payback 3. Discounted payback using the 3% rate 4. Internal rate of return
A semi-tractor costs $230,000. The driver of the truck plans to use the truck for 4 years, after which point it will have a salvage value of $35,000. The cost to operate and maintain the truck each year is $10,000. If the driver has a MARR of 6%, what is the capital recovery cost of the semi-tractor?
A delivery car had a first cost of $40,000, an annual operating cost of $18,000, and an estimated $3500 salvage value after its 6-year life. Due to an economic slowdown, the car will be retained for only 3 years and must be sold now as a used vehicle. At an interest rate of 11% per year, what must the market value of the used vehicle be in order for its AW value to be the same as the AW if it had been kept for its full life cycle? The market value of the used vehicle is determined to be $
You invested on a special pizza oven for $150,000. This commercial oven is depreciated over a 7-year period, and it is expected to have a $20,000 estimated market value at the end of the 7 years. Using the straight-line method, what is the book value in year 5? a) Between $31,900 and $32,300 b) Between $45,500 and $45,900 O c) Between $33,000 and $33,400 d) None of the answers are correct e) Between $58,300 and $58,700 f) Between $56,900 and $57,300
A delivery car had a first cost of $36,000, an annual operating cost of $16,000, and an estimated $3500 salvage value after its 6-year life. Due to an economic slowdown, the car will be retained for only 3 years and must be sold now as a used vehicle. At an interest rate of 14% per year, what must the market value of the used vehicle be in order for its AW value to be the same as the AW if it had been kept for its full life cycle? The market value of the used vehicle is determined to be $ .
Coronado, Inc. is considering purchasing equipment costing $39000 with a 7-year useful life. The equipment will provide cost savings of $8700 and will be depreciated straight-line over its useful life with no salvage value. Coronado Inc. requires a 9% rate of return. What is the approximate internal rate of return for this investment? Period 7 10% O 11% 000 9% 8% 7% 5.389 8% Present Value of an Annuity of 1 5.206 9% 5.033 10% 4.868 11% 4.712 14% 4.288
You can buy a piece of vacant land for $40,000 cash. You plan to hold it for 20 years and then sell it at a profit. During this period, you would pay annual property taxes of $815. You would have no income from the property. (a) Assuming that you want an 8% rate of return, at what net price would you have to sell the land 20 years hence? (b) What is open space conservation and why is it important? What options would you have in selling your property with this in mind?
Machine A costs $1,520,000 to buy and install and costs $48,000 per year to operate. The machine has a five-year useful life and zero salvage value. The required return is 15.5%. What is the equivalent annual cost of Machine A? (Answer: $506,819)
Poe Company is considering the purchase of new equipment costing $85,500. The projected annual cash inflows are $35,700, to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Poe requires a 10% return on its investments. The present value of an annuity of 1 and present value of an annuity for different periods is presented below. Compute the net present value of the machine. Periods Present Value of 1 at 10% Present Value of an Annuity of 1 at 10% 1 0.9091 0.9091 2 0.8264 1.7355 3 0.7513 2.4869 4 0.6830 3.1699 $45,409. $14,857. $27,665. $(14,857). $(27,665).
Two options are available for painting your house: (1) Oil-based paint, whichcosts $5,000 and (2) water-based paint, which costs $3,000. The estimated livesare 10 years and 5 years respectively. For either option, no salvage value isexpected at the end of respective service lives. Assume that you will keep andmaintain the house for 10 years. At an interest rate of 10%, which of the following statement is correct?(a) On an annual basis, Option 1 will cost about $850(b) On an annual basis, Option 2 is about $22 cheaper than Option 1(c) On an annual basis, both options cost about the same(d) On an annual basis, Option 2 will cost about $820.
Barcelona Football Club is spending $2 million on a new sewage system. The expected life of the system is 40 years, and it will have no market value at the end of its life. Operating and maintenance expenses for the system are projected to average $0.1 million per year. If the team MARR is 8% per year, what is the capitalized worth of the system' detailed answaer without using excel

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