virtually zero, how much must the company make annually in years 1 through 10 to recover its investment plus a return of 15% per year?

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
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U.S. Steel is considering a plant
expansion to produce austenitic,
precipitation hardened, duplex, and
martensitic stainless steel round bars that
is expected to cost $13 million now and
another $10 million 1 year from now. If
total operating costs will be $1.2 million
per year starting 1 year from now, and the
estimated salvage value of the plant is
virtually zero, how much must the
company make annually in years 1
through 10 to recover its investment plus
a return of 15% per year?
Transcribed Image Text:U.S. Steel is considering a plant expansion to produce austenitic, precipitation hardened, duplex, and martensitic stainless steel round bars that is expected to cost $13 million now and another $10 million 1 year from now. If total operating costs will be $1.2 million per year starting 1 year from now, and the estimated salvage value of the plant is virtually zero, how much must the company make annually in years 1 through 10 to recover its investment plus a return of 15% per year?
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