Street lighting fixtures and their sodium vapor bulbs for a two-block area of a large city need to be installed at a firstcost (investment cost) of $100,000. Annual maintenance expenses are expected to be $6,650 for the first 9 years and$9,500 each year thereafter upto 30 years. With an interest rate of 8% per year, what is the present worth cost ofthis project?Choose the closest answer belowOA. The present worth cost of the project is $236,701.OB. The present worth cost of the project is $248,491.OC. The present worth cost of the project is $189,145OD. The present worth cost of the project is $281,81327

The problem statement focuses on calculating the PW of the costs incurred for the project. It…

Answered: Street lighting fixtures and their…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 10PA: The Ham and Egg Restaurant is considering an investment in a new oven that has a cost of $60,000,...

See similar textbooks

Similar questions

If a copy center is considering the purchase of a new copy machine with an initial investment cost of $150,000 and the center expects an annual net cash flow of $20,000 per year, what is the payback period?
A grocery store is considering the purchase of a new refrigeration unit with an Initial Investment of $412,000, and the store expects a return of $100,000 in year one, $72000 in years two and three, $65,000 in years four and five, and $38,000 in year six and beyond, what is the payback period?
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?
The Ham and Egg Restaurant is considering an investment in a new oven that has a cost of $60,000, with annual net cash flows of $9,950 for 8 years. The required rate of return is 6%. Compute the net present value of this investment to determine whether or not you would recommend that Ham and Egg invest in this oven.
Jasmine Manufacturing is considering a project that will require an initial investment of $52,000 and is expected to generate future cash flows of $10,000 for years 1 through 3, $8,000 for years 4 and 5, and $2,000 for years 6 through 10. What is the payback period for this project?
Street lighting fixtures and their sodium vapor bulbs for a two-block area of a large city need to be installed at a first cost (investment cost) of $140,000. Annual maintenance expenses are expected to be $6,600 for the first 5 years and $9,500 each year thereafter upto 30 years. With an interest rate of 6% per year, what is the present worth cost of this project? Choose the closest answer below. A. The present worth cost of the project is $298,567. B. The present worth cost of the project is $258,550. C. The present worth cost of the project is $289,243. D. The present worth cost of the project is $361,614.
Street lighting fixtures and their sodium vapor bulbs for a two-block area of a large city need to be installed at a first cost (investment cost) of $120,000. Annual maintenance expenses are expected to be $6,500 for the first 20 years and $8,500 for each year thereafter. The lighting will be needed for an indefinitely long period of time. With an interest rate of 10% per year, what is the capitalized cost of this project (choose the closest answer below)? (a) $178,313 (b) $188,000 (c) $202,045 (d) $268,000.
Consider the retrofitted space-heating system with given the investment of $110,000 and market value of $8,000 at the end of the six-year study period, what is the minimum annual electrical power savings (in kWh) required to make this project economically acceptable? The MARR = 15% per year and electricity costs $0.10 per kWh.
A landfill has a first cost of $274,000. Actual operating and maintenance costs for the first year will be $48,000. and increase each year by 10%. Expected income for the landfill will be $142,000 each year in actual dollars. The landfill will be operating for 10 years. Inflation will average 5.4%, and a real return of 3.1% is desired. What is the present worth of this project using: a. A then-current (actual dollar) analysis. $ Round entry to two decimal places. The tolerance is ±20. b. A constant dollar analysis. $ Round entry to two decimal places. The tolerance is ±20.
A new equipment is being considered to replace an old equipment in a facility. The equipment would cost $7,480 and it would require a special maintenance at year 10 of the life expectancy of the equipment, which is of 15 years (also life of the project). The new equipment will generate savings in the order of $1,000 per year. If a discount rate of 6% is used what is the maximum cost of the maintenance at year 10 to make the project to be considered as a feasible option? answer is 4000 but how
A flexible pavement construction project is proposed. The estimated service life is 20 years. The initial cost is estimated at $205,000, and it would have a salvage value of $34,000 at the end of its useful life. The yearly maintenance is estimated at $2,505. What would be the present worth of life-cycle costs? What will be the user cost savings annually to justify the pavement construction ? Use interest rate of 5%.
The construction of a bypass road needs a capital investment of $200,000 and $10,000 would be required each year for maintenance. The annual benefits to the project have been estimated to be $60,000. The study period(estimated life) of the project is 10 years. The MARR is set at 12%. a. What is the discounted payback period(in years)? b. Determine whether this is a good investment using Modified Benefit-Cost Ratio method with Present Worth(PW). c. Using Conventional Benefit-Cost Ratio method with PW but the MARR is set at 12%, is this project acceptable?

SEE MORE QUESTIONS

Recommended textbooks for you

Principles of Accounting Volume 2

Accounting

ISBN:

9781947172609

Author:

OpenStax

Publisher:

OpenStax College

Managerial Accounting: The Cornerstone of Busines…

Accounting

ISBN:

9781337115773

Author:

Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:

Cengage Learning

Cornerstones of Cost Management (Cornerstones Ser…

Accounting

ISBN:

9781305970663

Author:

Don R. Hansen, Maryanne M. Mowen

Publisher:

Cengage Learning

Principles of Accounting Volume 2

Accounting

ISBN:

9781947172609

Author:

OpenStax

Publisher:

OpenStax College

Managerial Accounting: The Cornerstone of Busines…

Accounting

ISBN:

9781337115773

Author:

Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:

Cengage Learning

Cornerstones of Cost Management (Cornerstones Ser…

Accounting

ISBN:

9781305970663

Author:

Don R. Hansen, Maryanne M. Mowen

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS