SAMPLE PROBLEM A new concrete road has been constructed in line with the government's Build-Build-Build Program which needs no maintenance until the end of 2 years when P85,000 will be required to cover the repair and maintenance costs. For the succeeding 5 years, P105,000 will be required at the end of each year to cover the same costs and after this, P135,000 will be needed at the end of each year for the next 5 years. If the interest rate is found to be 14% compounded annually, determine the equivalent annual cost (Annuity Cost) for the 12-year period.

SAMPLE PROBLEM A new concrete road has been constructed in line with the government's Build-Build-Build Program which needs no maintenance until the end of 2 years when P85,000 will be required to cover the repair and maintenance costs. For the succeeding 5 years, P105,000 will be required at the end of each year to cover the same costs and after this, P135,000 will be needed at the end of each year for the next 5 years. If the interest rate is found to be 14% compounded annually, determine the equivalent annual cost (Annuity Cost) for the 12-year period.

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

Problem 1PS

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A new municipal refuse-collection truck can be purchased for $84,000. Its expected useful life is six years, at which time its market value will be zero. Annual receipts less expenses will be approximately $18,000 per year over the six-year study period. At MARR of 19%, calculate the benefit-cost ratio of the project a. 0.53 b. 0.63 c. 0.73 d. none of the above
Engineering Economy - ENGR 3322 A new municipal refuse-collection truck can be purchased for $84,000. Its expected useful life is six years, at which time its market value will be zero. Annual receipts less expenses will be approximately $18,000 per year over the six-year study period. At MARR of 19%, calculate the benefit-cost ratio of the project a. 0.53 b. 0.63 c. 0.73 d. None of the choices
An asphalt road requires no upkeep until the end of 2 years when P60, 000 will be needed for repairs. After this P90, 000 will be needed for repairs at the end of each year for the next 5 years, then P120, 000 at the end of each year for the next 5 years. If money is worth 14% compounded annually, what was the equivalent uniform annual cost for the 12-year period? P79,245.82 P69,245.82 P59,245.82 P49,245.82
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Required Information [The following information applies to the questions displayed below.] Project A requires a $365,000 initial investment for new machinery with a five-year life and a salvage value of $42,000. The company uses straight-line depreciation. Project A is expected to yield annual net income of $25,300 per year for the next five years. Compute Project A's payback period. Choose Numerator: Payback Period 7 Choose Denominator: = Payback Period Payback period =
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Required information Nuclear safety devices installed several years ago have been depreciated from a first cost of $200,000 to zero using the Modified Accelerated Cost Recovery System (MACRS). The devices can be sold on the used equipment market for an estimated $15,000, or they can be retained in service for 5 more years with a $9000 upgrade now and an operating expenses (OE) of $6000 per year. The upgrade investment will be depreciated over 3 years with no salvage value. The challenger is a replacement with newer technology at a first cost of $40,000, n = 5 years, and S= 0. The new units will have operating expenses of $7000 per year. Use a 5-year study period, an effective tax rate of 41%, an after-tax minimum acceptable rate of return (MARR) of 18% per year, and an assumption of classical straight line depreciation (no half-year convention) to perform an after-tax AW-based replacement study. The annual worth of the defender is determined to be $| The annual worth of the challenger…
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A new municipal refuse-collection truck can be purchased for $84,000. Its expected useful life is six years, at which time its market value will be zero. Annual receipts less expenses will be approximately $18,000 per year over the six-year study period. At MARR of 19%, calculate the following a. future worth of the project Choices: $ - 63,250 $ - 64,250 $ - 65,250 None of the choices b. the return on investment of the project Choices: -35% -36% -37% None of the choices c. benefit-cost ratio of the project Choices: 0.53 0.63 0.73 None of the choices d. the internal rate of return of the project. Choices: 7% 8% 9% None of the choices
D-76 A new chemical remediation tank is needed. C'urrent lechnology tanks, which cost $150,000, musI Ie drained and treated every 2 years at a cost of $30,000; the tanks will last 10 years, and ench will have a salvage value of 5% of first cost. A tank with new technology has just come on the market. T'hore are no periodic maintenance costs, and a tank will last 20 years. If the new tanks cost $325,000, what minimum salvage value, as a percentage of lirst cont, would be required for this technology to be a betler option? Use a 12% interest rate. (a) 10% (b) 36% (c) 57% (d) 72%

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