A manufacturer plans to open a new plant. The new plant will cost $4,000,000 to build and make ready for production. Company management believes that the plant will produce a net profit of $100,000 in the first year and that profit will increase 5% per year until year 9 at which point profit will remain constant for the remainder of the plant's useful life. Determine the payback period for the plant. Do not consider the effect of interest. Express your answer in years to the nearest whole year.

A manufacturer plans to open a new plant. The new plant will cost $4,000,000 to build and make ready for production. Company management believes that the plant will produce a net profit of $100,000 in the first year and that profit will increase 5% per year until year 9 at which point profit will remain constant for the remainder of the plant's useful life. Determine the payback period for the plant. Do not consider the effect of interest. Express your answer in years to the nearest whole year.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

An investment proposal calls for a $417,805.55 payment now and a second $282,934.40 payment 9 years from now. The investment is for a project with a perpetual life. The annual interest rate is 6%. What is the equivalent uniform annual cost?
A car’s warranty is 3 years. Upon expiration, annual maintenance starts at $150 and then climbs $25 per year until the car is sold at the end of Year 7. Use a 10% interest rate and find the present worth of these expenses.
Suppose you are offered two options: (i) receive Taka 30,000 at the end of 5 years or (ii) receive Taka P today and another Taka P 2 year later. When you invest the P Taka in ecommerce it pays around 8% profit yearly. What value of P would be same as promise of Taka 30,000 after 5 years? Assume there is no risk in this future payment.
Draw cash flow as well !!
Discount 1,650 for 4 months at 6% simple interest. What is the discount ?
The income from an established chain of laundromats is a continuous stream with its annual rate of flow at timer given by )- 210,000 (dollars per year). If money is worth 3% compounded continuously, find the present value and future value of this chain over the next 5 years. (Round your answers to the nearest dollar) present value future value $ Need Help?
Bruce deposited $100 into the bank account. The account is credited with interest at a nominal annual interest rate of 4% which can be converted every half year. At the same time, Peter deposited $100 into a separate account. Peter's account is credited with annual interest of δ. After 7.25 years, their value for money is the same. calculate value δ!
Ed opened a savings account 5 years ago with $600. The account earns 3% simple interest per year, and Ed has not added or withdrawn from the account. How much interest has Ed earned?
Please no written by hand solutions Q3. An individual makes five annual deposit of $2000 in a savings account that pays interest at a rate of 4% per year. One year after making the last deposit, the interest rate changes to 6% per year. Five years after the last deposit the accumulated money is withdrawn from the account. How much is withdrawn?
$1000 is deposited into a 9% account today. At the end of 2 yr, another $3000 will be deposited. In 5 yr, a $4000 purchase will be made. Approximately how much will be left in the account 1 yr after the purchase?
riginal price 3. Five years ago, Mary opened a savings account for a condo on the beach that earns 2.6% simple interest each year. She started the account with $550 and has not touched the account since. How much money is in the account now?
A car was bought on an installment basis with a monthly installment of 30,000 for 60 months. If the rate is 12% compounded annually, calculate the cash price of the car. a.) 1,396,19 b.) 1,693,619 c.) 1,379,916 d.) 1,367,634 Show solution pleasr for 5 star rating