Company ABC is considering investing in a project whose initial cost is $186000. It saves $44000 in the first year, increasing by $5800 eachyear thereafter. The salvage value of the project is $12500 at the end of year 7. The cost of operating and maintenance in the first year is$3400, increasing by 4% each year thereafter. The company wants to see if the project is worth to be invested in. To help ABC to decide, youshould find the present worth (PW) of the project. The company's MARR is 12%.Answer:

Here's how to find the Present Worth (PW) of the project for Company ABC:1. Calculate the annual…

Answered: Company ABC is considering investing in…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Similar questions

Calculate the future worth (FW) at 10% of a project that will save $25K per year for 20 years. The first cost is $120K, and the salvage value is $20K. Compare this with the PW and the EAW. (Please show the process and solution ty.)
Littrell's Nursery needs a new irrigation system. System one will cost $145,000, have annual maintenance costs of $10,000, and need an overhaul at the end of year six costing $30,000. System two will have first year maintenance costs of $5,000 with increases of $500 each year thereafter. System two would not require an overhaul. Both systems will have no salvage value after 12 years. If Littrell's cost of capital is 4%, using annual worth analysis determine the maximum Littrell's should be willing to pay for system two.
Hinson’s Homegrown Farms needs a new irrigation system. System one will cost $145,000, have annual maintenance costs of $10,000, and need an overhaul at the end of year six costing $30,000. System two will have first-year maintenance costs of $5000 with increases of $500 each year thereafter. System two would not require an overhaul. Both systems will have no salvage value after 12 years. If Hinson’s cost of capital is 4%, using annual worth analysis determine the maximum Hinson’s should be willing to pay for system two.
Company ABC is considering investing in a project whose initial cost is $185000. It saves $42000 in the first year, increasing by $5400 each year thereafter. The salvage value of the project is $13600 at the end of year 7. The cost of operating and maintenance in the first year is $3300, increasing by 5% each year thereafter. The company wants to see if the project is worth to be invested in. To help ABC to decide, you should find the present worth (PW) of the project. The company's MARR is 14%.
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.
A firm will install one of two mechanical devices to reduce costs. Both devices have useful lives of 5 years and no salvage value. Device A costs $10,000 and can be expected to result in $3000 savings annually. Device B costs $13,500 and will provide cost savings of $3000 the first year, but savings will increase $500 annually, making the second-year savings $3500, the third-year savings $4000, and so forth. With interest at 7%, which device should the firm purchase?
Be the Bridge is a non-profit organization that anticipates the following expenditures. Year Expenditures 1 $40,000 2 $45,000 3 $80,000 4 $280,000 5 $550,000 6 $750,000 It would like to set aside money in an account today to ensure that it has enough money to cover these expenditures. How much money would Be the Bridge need to invest if its money is kept in an account that earns 10% that is compounded annually? Click here to access the TVM Factor Table calculator. $ million Carry all interim calculations to 5 decimal places and then round your final answer to three decimal places. Please enter your answer in millions of dollars. The tolerance is ±0.002.
A project being considered by the XYZ Company will have $100,000 in construction costs in each of the first 3 years of the project. Income of $100,000 will begin flowing in Year 4 and will continue through Year 10. Find the net present worth at 4% of the project
$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?
A purchase of a new machine is being evaluated. If we assume 12% annual interest, what is the Equivalent Uniform Annual Cost? Choose the nearest answer. Initial Cost $30,000 Annual Maintenance $1,500 Salvage Value $5,000 Life 6 years
A company is setting up a project to buld housing Units in which the investment volume is estimated at ane million dollars to build (100 houses), the price of the house is (20,000) dollars, to be paid in equal installiments for a periad of (4 years), the annual Costs are estimated at (50) thousand dollars. Calculate the Simple rate of returm, the payoack period and the internal rate of retum for the project, bearing in mind that the lowest discount hiahest is (12'%). Will the project be accepted or rejected. rate is (8b) and the
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?

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