An engineer launches a project in the country's top techohub. This involves rental of a computer unit for online class students. He felt that because of the density of students in the area, 90% of his 30-units will be occupied per sem (5 months each) per year. He desires a rate of return of 20%. Other pertinent data are the following: Office investment - 1,000,000 Computer investment per unit - 35,000 Cost of computer after 10 years - 5,000 Office rental per month - 9,000 Computer rental per unit per month - 2,000 Annual maintenance budget per unit - 5,000 Business tax - 1% of the total investment Insurance - 0.5% of total investment Assess the project using (1) ROR, (2) Present Worth Method, and (3) Future Worth Method. (4) Estimate the payback period of this project.

An engineer launches a project in the country's top techohub. This involves rental of a computer unit for online class students. He felt that because of the density of students in the area, 90% of his 30-units will be occupied per sem (5 months each) per year. He desires a rate of return of 20%. Other pertinent data are the following: Office investment - 1,000,000 Computer investment per unit - 35,000 Cost of computer after 10 years - 5,000 Office rental per month - 9,000 Computer rental per unit per month - 2,000 Annual maintenance budget per unit - 5,000 Business tax - 1% of the total investment Insurance - 0.5% of total investment Assess the project using (1) ROR, (2) Present Worth Method, and (3) Future Worth Method. (4) Estimate the payback period of this project.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 15E: Gina Ripley, president of Dearing Company, is considering the purchase of a computer-aided...

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An engineer launches a project in the country's top techohub. This involves rental of a computer unit for online class students. He felt that because of the density of students in the area, 90% of his 30-units will be occupied per sem (5 months each) per year. He desires a rate of return of 20%. Other pertinent data are the following: Office investment Computer investment per unit |Cost of computers after 10 yrs Office rental per month |Computer rental per unit per month |Annual maintenance budget per unit Business tax Insurance P 1,000,000 P 35,000 P 5,000 P 9,000 P 2,000 P 5,000 | 1% of Total Investment 0.5% of Total Investment Assess the project using (1) ROR, (2) Present Worth Method, and (3) Future Worth Method. (4) Estimate the payback period of this project.
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