Contemporary Engineering Economics (6th Edition)
Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
Question
Book Icon
Chapter 11, Problem 25P

(a):

To determine

Calculate the net cash flow.

(b):

To determine

Present worth is constant dollar.

(c):

To determine

Acceptability of the project.

Blurred answer
Students have asked these similar questions
A builder paid $120,000 for a house and lot. The value of the land was appraised at $65,000, and the value of the house at $55,000. The house was then torn down at an additional cost of $8,000 so that a warehouse could be built on the lot at a cost of $50,000. What is the total value of the property with the warehouse? For depreciation purposes, what is the cost basis for the warehouse?
Your company has been doing well, reaching $1.18 million in earnings, and is considering launching a new product. Designing the new product has already cost $505,000. The company estimates that it will sell 815,000 units per year for $2.91 per unit and variable non-labor costs will be $1.16 per unit. Production will end after year 3. New equipment costing $1.18 million will be required. The equipment will be depreciated to zero using the 7-year MACRS schedule. You plan to sell the equipment for book value at the end of year 3. Your current level of working capital is $301,000. The new product will require the working capital to increase to a level of $384,000 immediately, then to $406,000 in year 1, in year 2 the level will be $360,000, and finally in year 3 the level will return to $301,000. Your tax rate is 21%. The discount rate for this project is 10.2%. Do the capital budgeting analysis for this project and calculate its NPV. Note: Assume that the equipment is put into use in year…
Your company has just signed a three-year nonrenewable contract with the city of New Orleans for earthmoving work. You are investigating the purchase of heavy construction equipment for this job. The equipment costs $209,000 and qualifies for five-year MACRS depreciation. At the end of the three-year contract, you expect to be able to sell the equipment for $74,000. If the projected operating expense for the equipment is $64,000 per year, what is the after-tax equivalent uniform annual cost (EUAC) of owning and operating this equipment? The effective income tax rate is 25%, and the after-tax MARR is 11% per year. Click the icon to view the GDS Recovery Rates (r) for the 5-year property class. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 11% per year. The after-tax equivalent uniform annual cost is $ (Round to the nearest dollar.) More Info GDS Recovery Rates (k) 5-year Property Class 0.2000 0.3200 0.1920 0.1152 0.1152 0.0576 Year 1 2 3…
Knowledge Booster
Background pattern image
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning