Question

In: Economics

A project has a first cost P, annual savings A and a salvage value of $500...

A project has a first cost P, annual savings A and a salvage value of $500 at the end of its 10-year service life. It is also known that the IRR for this project is 11 %, and the payback period is 8 years. What is the project's first cost? (Don't use the $ sign and coma in your answer!)

Solutions

Expert Solution


Related Solutions

1. project initial cost (incurred at beginning of year 1) Project life Salvage value Positive annual...
1. project initial cost (incurred at beginning of year 1) Project life Salvage value Positive annual cash flow (received at the end of each year) A $200000 16 years $0 $28000 B $56000 14 years $0 $9783 B is higher than the Internal Rate of Return of project A. Required: A) Is the NPV for Project A higher than, equal to, or lower than, the NPV for Project B, assuming a 10% discount rate? B) Is the Payback Period for...
Capital cost ($) Annual operating cost ($) Lifetime (years) Salvage value ($) Annual electricity supplied (MWh)...
Capital cost ($) Annual operating cost ($) Lifetime (years) Salvage value ($) Annual electricity supplied (MWh) 300 000 27 200 25 40 000 400 1.1 Using the table above, calculate the lifecycle cost of the technology over an assessment period of 25 years at a real discount rate of 5% 1.2 Calculate the average unit cost of the power in present value terms (in cents/kWh) supplied by the technology over its lifetime at this real discount rate. 1.3 What is...
A government project has $500 of initial cost and 62.5 uniform annual benefit. If i =...
A government project has $500 of initial cost and 62.5 uniform annual benefit. If i = 12% and n = infinity, then the net present worth of this project is most nearly: a) 20.84 b) 41.67 c) 30.25 d) 50.00 e) 22.40 f) No correct answer above
Machine A has an initial cost of $19,500 and a salvage value of $7500 (today's value)...
Machine A has an initial cost of $19,500 and a salvage value of $7500 (today's value) at the end of its 12 year life. Machine B has an initial cost of $17,900 and a salvage value of $2300 (today's value) at the end of it's 6 year life. Inflation is 3.9%                                           Don’t forget, we will need to increase the costs and salvage values by inflation for any transaction other than year 0.                                              The company uses a MARR rate of 14%                                            ...
Cost $75,000; Salvage value: $10,000; Useful life: 10 Calculate annual depreciation on this machi... Cost $80,000;...
Cost $75,000; Salvage value: $10,000; Useful life: 10 Calculate annual depreciation on this machi... Cost $80,000; Salvage value: $10,000; Useful life: 10 Calculate annual depreciation on this machinery using doublr-declining balance method. Be careful not to exceed the salvage value. If the salvage value is zero, switch to straightline in the year when straight-line yields higher depreciation. (use the remaining valye as the starting point when you change)
Consider a machine that has an initial cost of $126,000 and an estimated salvage value of...
Consider a machine that has an initial cost of $126,000 and an estimated salvage value of $27,000. After some analysis we conclude that this machine will have O&M costs of $1,850 per year but based on the faulty nature of this machine we will have to incur in major maintenance costs at the end of year 3 and 6. During year 3 we expect to pay $14,000 and for year we estimate a $16,500. The machine will have a useful...
An asset has an initial cost of $60,000, a salvage value of $5,000, and a depreciation...
An asset has an initial cost of $60,000, a salvage value of $5,000, and a depreciation life of 6 years. a) Determine the book value for year 3 using sum-of-the-years-digits depreciation. b) Determine the depreciation for year 3 using double declining balance depreciation. c) Determine the equivalent annual capital recovery plus a 12% return for year 3, assuming declining balance depreciation.
we are evaluating a project that cost $690,000, has a five-yeqar life, and has no salvage...
we are evaluating a project that cost $690,000, has a five-yeqar life, and has no salvage value. assume that depreciation is straight line to zero over the project. sales are projected at $71000 units per year. prices per unit is $75, variable cost per unit $50 and fixed cost are $790000 per year. The tax rate is 35% and are are require a return of 15% on this project. suppose the projections given for price, quantity, variable cost, and fixed...
.A machine cost $200,000 and has a salvage value of $100,000 if kept for one year....
.A machine cost $200,000 and has a salvage value of $100,000 if kept for one year. The salvage value will decrease by $50,000 in years 2 and 3 and remain zero after year 3. The operating costs are $50,000 the first year and increase by $50,000 per year. So operating costs in year two will be $100,000, and in year three $150,000 and so on. How long should the equipment be kept so that annual cost is minimized if the...
If the after tax interest is 10%, what is the after tax present worth of machinery that has a first cost of $66,000 and annual savings of $7,700?
If the after tax interest is 10%, what is the after tax present worth of machinery that has a first cost of $66,000 and annual savings of $7,700? The machinery is sold for $1100 salvage value at the end of a seven year life. The corporate tax rate is 59%.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT