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

Beginning next year, a foundation will support an annual seminar on campus with the earnings of a $200,000 gift it received this year. It is felt that 6% interest will be realized for the first 10 years, but that plans should be made to anticipate an interest rate of 4% after that time. What amount should be added to the foundation now to fund the seminar at the $20,000 level into infinity?

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Suppose Omni Consumer Products's CFO is evaluating a project with the following cash inflows. She does not know the project's initial cost; however, she does know that the project's regular payback period is 2.5 years. Year Cash Flow Year 1 $350,000 Year 2 $400,000 Year 3 $475,000 Year 4 $475,00 If the project's weighted average cost of capital (WACC) is 9%, what is its NPV? $373,562 $336,206 $317,528 $429,596
Net present value (NPV) of the project =Single payoff x PVIAF (10.20%, 9 years) - initial outlay =  $6,947 x 0.42340 - $2,182 = $759.39 What's the equation for the bolded item?
Suppose that you purchase a tractor for $170,000 and sell it in 10 years for $50,000. What is the annualized cost (capital recovery) if your required return on capital is 12%?
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