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In: Finance

Some particulars for a project are as follows: Capital Cost ($ Mn) 1000 Annual Operating cost...

Some particulars for a project are as follows:

Capital Cost ($ Mn)

1000

Annual Operating cost ($ Mn/yr)

10% of Capital Cost

Annual Benefits ($Mn/yr)

400

Useful Life (years)

20

Interest/Discount rate (percent)

10

a) What is the Life Cycle Cost (LCCs) of the project – expressed in present value and future value terms?

b) What is the Life Cycle Cost (LCCs) of the project – with year 10 as the base year? c) What is the NPV of the project with year 15 as the base year?
d) What is the Pay-back (PB) period for this project?
e) What is Equivalent Annual Cost (EAC) for this project?

f) At what discount rate will this project become unviable?

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Expert Solution

jeff jeffy answered 11 months ago
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