The following table contains a summary of how a project's balance is expected to change over its 5year service life at 10% interest.End of PeriodProject Balance-$1,000-1,5006001390041,5002,0005Which of the following statements is incorrect?Select one:a. The net future of the project at 10% interest is $2,000b. The required additional investment at the end of period 1 is $500c. The net present worth of the project at 10% interest is $1,242d. Within 2 years, the company will recover all its investments and the cost of funds(interest) from the project

Answered: Image /qna-images/answer/b886d481-c731-4b22-be61-0ac335ec9f16.jpg

The following table contains a summary of how a project's balance is expected to change over its 5 year service life at 10% interest. End of Period Project Balance -$1,000 -1,500 600 1 2 3 900 4 1,500 2,000 5 Which of the following statements is incorrect? Select one: O a. The net future of the project at 10% interest is $2,000 b. The required additional investment at the end of period 1 is $500 c. The net present worth of the project at 10% interest is $1,242 d. Within 2 years, the company will recover all its investments and the cost of funds (interest) from the project

The following table contains a summary of how a project's balance is expected to change over its 5 year service life at 10% interest. End of Period Project Balance -$1,000 -1,500 600 1 2 3 900 4 1,500 2,000 5 Which of the following statements is incorrect? Select one: O a. The net future of the project at 10% interest is $2,000 b. The required additional investment at the end of period 1 is $500 c. The net present worth of the project at 10% interest is $1,242 d. Within 2 years, the company will recover all its investments and the cost of funds (interest) from the project

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

The following table contains the summary of how a project's balance changes over its 5- year service life at 10% interest (MARR). End of period Project Balance S-1,000 S-1,500 $600 1 3 $900 $1,500 $2,000 4 5 Which of the following statements is incorrect? Select one: a. The required additional investment at the end of period 1 is $500 b. The net present worth of the project at 10% interest is $1,242 c. The rate of return of the project should be greater than 10% d. The net future worth of the project at 10% interest is $2,000
Maria Bakery Company is considering two investments, both of which cost $8,000. The cash flows are as follows: Year 1 2 3 b.) $14,029 & $18,071 a.) 1 year & 1 year a.) What is the payback period for Project A & Project B? b.) What is the net present value (NPV) for Project A & Project B? Assume a cost of capital of 10%. Select the correct answers for parts (a) and (b). b.) none listed Project Cash Flows Project A $12,000 8,000 6,000 b.) $18,071 & $13,029 b.) $14,029 & $19,071 a.) none listed a.) 0.5 years & 0.8 years a.) 0.7 years & 0.8 years Project B $10,000 6,000 16,000
QUESTION SEVEN A. Project A has a net present value of zero when the discount factor of 20% is used. How much return is the project earning? 3. If project A above is earning K150, 000 per year in perpetuity, what is the initial investment cost of the project? Company A expects to generate K150, 000 cash flows per year in perpetuity and the risk adjusted discount rate is 20%. What should be the certainty equivalent cash flows when the risk free rate is 10%
You have the following information on a potential investment. Capital investment $900,000 Estimated useful life 6 years Estimated salvage value 0 Estimated annual net cash inflow $213,000 Required rate of return 10% What is the internal rate of return on the investment? a. 10% b. 11% c. 12% d. 9%
Consider a project that will bring in upfront cash inflows for the first two yearsbut require paying some money to close the project in the third year. A0 A1 A2 $6500 $4500 $13000 This is a simple borrowing project. Determine the borrowing rate of return
1. Given: Assume i= 8.0% A new tractor costs $200,000. Annual O&M costs and salvage values are given below: Year Salvage Value O&M Cost 1$ 35,000.00$ 100,000.00 2 $ 38,000.00 $ 3$ 43,000.00 $ 4 $ 90,000.00 80,000.00 70,000.00 50,000.00 $ 59,000.00 $ 60,000.00 5 $ 6 $ 70,000.00S 7$ 81,000.00S 8 $ 92,000.00 S 9$ 104,000.00 $ 50,000.00 40,000.00 30,000.00 20,000.00 10,000.00 10 $ 120,000.00 $ Find: a. Calculate the NPV for all 10 years b. Calculate the EUAC for all 10 years c. Plot EUAC vs. Time d. What year should the tractor be retired for the best economic life?
The Michner Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (1) Cash Flow (II) 0 -$ 71,000 -$ 17,300 1 33,000 9,350 2 33,000 9,350 3 33,000 9,350 a-1.If the required return is 12 percent, what is the profitability index for both projects? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.) Project I Project II a- If the company applies the profitability index decision rule, which project should the 2. firm accept? ○ Project I ○ Project II b- What is the NPV for both projects? (A negative answer should be indicated by a 1. minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
Compute the NPV statistic for Project Y if the appropriate cost of capital is 12 percent. Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places. Project Y Time: 0 1 2 3 Cash flow: -$ 8,000 $ 3,630 $ 4,460 $ 1,800 $ 580 NPV (Click to select) ject be accepted or rejected? Accepted Rejected
Moving another question will save this response. Question 3 A project with the following costs are under consideration to determine its profitability. Using the IRR comparison, and an annual MARR of 10% compounded semiannually, determine if the project should be executed First cost Semiannual operating cost $45,000 $10,000 Semiannual income $20,000 Salvage value Life in years Oa. IRR = 17% semiannual $20,000 4 years O b. IRR = 18.7% semiannual O IRR = 16.9% semiannual Od. IRR = 15 3% semiannual Moving to another question will save this response. Question 3 a 25 points Save Question 3 of 4
Give typing answer with explanation and conclusion A small company purchased now for $120,000 will lose $300 each year for the first four years. An additional $600 in the company in the fourth year will result in a profit of $9500 each year from the fifth through the twelfth year. At the end of 12 years, the company can be sold for $135,000. a) Draw the cash flow diagram b) Determine the IRR for this project. c) Calculate the FW if MARR is 5%. d) Calculate the ERR when ε = 7%.
MY NOTES ASK YOUR TEACHER Derive the equation to compute the equivalent annual cost given the capital cost of a highway, such that A (A/P) x P, where A/P is the capital recovery factor. (Use the following as necessary: P for the present worth, i for the annual interest as a decimal number, and n for the number of years.) A= DACCICUCE 43 Compute the equivalent annual cost (in dollars) if the capital cost of a transportation project is $500,000, annual interest 9.8%, and n 30 years. (Enter your answer as a positive value.)
You've estimated the following cash flows (in $) for two projects: Year Project A Project B 0 -5,100 -7,650 1 1,325 1,325 2 2,148 2,148 3 3,504 7,040 The required return for both projects is 8%. What is the NPV for project A? What is the NPV for project B? Which project seems better according to the NPV method? Project A Project B