There is an alternative for a construction machine. This alternative requires an investment of 128*10“ TL. The economic life of the project is30 years. The discount rate is %3 It is estimated that annual maintenance costs will be 35*10* TL in the first half of its economic life and 45*10ª TL in the other half. The expected benefit of this alternative becomes 20*10* TL with a linear increase at the end of the first 10 years and continues as 25*104 until the end of its economic life. The scrap value after the useful life is 115*10° TL. Find out whether it is profitable by finding the benefit / cost ratio with future value analysis for this machine.

There is an alternative for a construction machine. This alternative requires an investment of 12810“ TL. The economic life of the project is30 years. The discount rate is %3 It is estimated that annual maintenance costs will be 3510* TL in the first half of its economic life and 4510ª TL in the other half. The expected benefit of this alternative becomes 2010* TL with a linear increase at the end of the first 10 years and continues as 25104 until the end of its economic life. The scrap value after the useful life is 11510° TL. Find out whether it is profitable by finding the benefit / cost ratio with future value analysis for this machine.

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

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

3. There is an alternative for a construction machine. This alternative requires an investment of 128*10* TL. The
economic life of the project is30 years. The discount rate is %3 It is estimated that annual maintenance costs will
be 35*10* TL in the first half of its economic life and 45*10* TL in the other half. The expected benefit of this
alternative becomes 20*10' TL with a linear increase at the end of the first 10 years and continues as 25*10* until
the end of its economic life. The scrap value after the useful life is 115*10° TL. Find out whether it is profitable by
finding the benefit / cost ratio with future value analysis for this machine.

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