The pumping cost for delivering water from the Ohio River to Wheeling Steel for cooling hot rolled steel was $1.8 million for the first 4 years. An effective energy conservation program resulted in a reduced cost of $1.77 million in year 5, and $1.74 million in year 6, and amounts decreasing by $30,000 each year through year 10. What is the present worth of the pumping costs in year 0 at an interest rate of 8% per year? The present worth of the pumping costs is determined to be $

The pumping cost for delivering water from the Ohio River to Wheeling Steel for cooling hot rolled steel was $1.8 million for the first 4 years. An effective energy conservation program resulted in a reduced cost of $1.77 million in year 5, and $1.74 million in year 6, and amounts decreasing by $30,000 each year through year 10. What is the present worth of the pumping costs in year 0 at an interest rate of 8% per year? The present worth of the pumping costs is determined to be $

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 3P

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The pumping cost for delivering water from the Ohio River to Wheeling Steel for cooling hot rolled steel was $1.8 million for the first 5 years. An effective energy conservation program resulted in a reduced cost of $1.71 million in year 6, $1.625 million in year 7, and amounts decreasing by 5% each year through year 15. What is the equivalent annual worth of the pumping costs at an interest rate of 8% per year?
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