× Your answer is incorrect. A university's college of engineering would like to determine how much it will cost to keep its computing equipment current. In today's dollars, the college estimates that it will cost $190,000 to replace old computing equipment. Due to decreasing prices on computers, it estimates that this cost will decrease each of the following years by 7%. What would the present worth of computing updates for years 1-5 be, assuming a required 15% real return on its investments? Click here to access the TVM Factor Table calculator. A Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. The tolerance is + $10. 564921.75

× Your answer is incorrect. A university's college of engineering would like to determine how much it will cost to keep its computing equipment current. In today's dollars, the college estimates that it will cost $190,000 to replace old computing equipment. Due to decreasing prices on computers, it estimates that this cost will decrease each of the following years by 7%. What would the present worth of computing updates for years 1-5 be, assuming a required 15% real return on its investments? Click here to access the TVM Factor Table calculator. A Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. The tolerance is + $10. 564921.75

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 15E: Gina Ripley, president of Dearing Company, is considering the purchase of a computer-aided...

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A university's college of engineering would like to determine how much it will cost to keep its computing equipment current. In today's dollars, the college estimates that it will cost $100,000 to replace old computing equipment. Due to decreasing prices on computers, it estimates that this cost will decrease each of the following years by 2%. What would the present worth of computing updates for years 1-5 be, assuming a required 10% real return on its investments?
A university's college of engineering would like to determine how much it will cost to keep its computing equipment current. In today's dollars, the college estimates that it will cost $100,000 to replace old computing equipment. Due to decreasing prices on computers, it estimates that this cost will decrease each of the following years by 2%. What would the present worth of computing updates for years 1-5 be, assuming a required 10% real return on its investments? Click here to access the TVM Factor Table calculator. $ Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. The tolerance is ± $10. eTextbook and Media Hint Save for Later Attempts: 0 of 1 used Submit Answer
A university's college of engineering would like to determine how much it will cost to keep its computing equipment current. In today's dollars, the college estimates that it will cost $160,000 to replace old computing equipment. Due to decreasing prices on computers, it estimates that this cost will decrease each of the following years by 4%. What would the present worth of computing updates for years 1-5 be, assuming a required 11% real return on its investments? Click here to access the TVM Factor Table calculator. $ Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. The tolerance is ± $10.
How would this be solved in excel?
The management of Kimco is evaluating the possibility of replacing their large mainframe computer with a modern network system that requires much less office space. The network would cost $760,000 (including installation costs) and would save $150,000 per year in net cash flows (accounting for taxes and depreciation) in Year 1-2, $160,000 in year3-4, and $120,000 in year 5 due to efficiency gains. The current mainframe has a remaining book value of $160,000 and would be immediately sold for $120,000. Kimco’s discount rate is 10%, and its tax rate is 25%. Based on NPV, should management install the network system?
# 1. A theater owner is considering the installation of an air conditioning system which he believed will increase the number of theater goers by an average of l100 persons a day. The average price of ticket per person is P80.00 and the theater is in operation 360 days each year. The aircon system installation will cost P600,000.00 and it is estimated that maintenance cost is P12,000.00 per year. Based on the performance of similar systems, the daily operation cost will be P 2000.00 and the estimated life is 10 years. Taxes and insurance would be 3.5% of the first cost. For depreciation, assume that money can be invested at 12% compounded annually. If the theater is now earning a profit of 15% on its investment, would you recommend the installation of the new system? Use the rate of return method.
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A university spent $1.7 million to install solar panels atop a parking garage. These panels will have a capacity of 600 kilowatts (kW) and have a life expectancy of 20 years. Suppose that the discount rate is 10%, that electricity can be purchased at $0.30 per kilowatt-hour (kWh), and that the marginal cost of electricity production using the solar panels is zero. Hint: It may be easier to think of the present value of operating the solar panels for 1 hour per year first. Approximately how many hours per year will the solar panels need to operate to enable this project to break even? 776.54 1,109.34 1,774.94 1,331.21 If the solar panels can operate only for 998 hours a year at maximum, the project Continue to assume that the solar panels can operate only for 998 hours a year at maximum. In order for the project to be worthwhile (i.e., at least break even), the university would need a grant of at least break even.
A university spent $1.3 million to install solar panels atop a parking garage. These panels will have a capacity of 400 kilowatts (kW) and have a life expectancy of 20 years. Suppose that the discount rate is 20%, that electricity can be purchased at $0.30 per kilowatt-hour (kWh), and that the marginal cost of electricity production using the solar panels is zero. Hint: It may be easier to think of the present value of operating the solar panels for 1 hour per year first. Approximately how many hours per year will the solar panels need to operate to enable this project to break even? a. 2,224.69 b. 1,112.35 c. 2,892.10 d. 2,447.16 If the solar panels can operate only for 2,002 hours a year at maximum, the project __________ break even. Continue to assume that the solar panels can operate only for 2,002 hours a year at maximum. In order for the project to be worthwhile (i.e., at least break even), the university would need a grant of…
auto repair company needs a new machine that will check for defective sensors. The machine has an initial investment of $224,000. Incremental revenues, including cost savings, are $120,000, and incremental expenses, including depreciation, are $50,000. There is no salvage value. What is the accounting rate of return (ARR)? NOTE: Enter numbers with two decimals (e.g., 33.44 or 20.00) ng question % Next page
Gina Ripley, president of Dearing Company, is considering the purchase of a computer-aided manufacturing system. The annual net cash benefits and savings associated with the system are described as follows: The system will cost 9,000,000 and last 10 years. The companys cost of capital is 12 percent. Required: 1. Calculate the payback period for the system. Assume that the company has a policy of only accepting projects with a payback of five years or less. Would the system be acquired? 2. Calculate the NPV and IRR for the project. Should the system be purchasedeven if it does not meet the payback criterion? 3. The project manager reviewed the projected cash flows and pointed out that two items had been missed. First, the system would have a salvage value, net of any tax effects, of 1,000,000 at the end of 10 years. Second, the increased quality and delivery performance would allow the company to increase its market share by 20 percent. This would produce an additional annual net benefit of 300,000. Recalculate the payback period, NPV, and IRR given this new information. (For the IRR computation, initially ignore salvage value.) Does the decision change? Suppose that the salvage value is only half what is projected. Does this make a difference in the outcome? Does salvage value have any real bearing on the companys decision?