I want answer within 1HR With detailed explaination 12-07 The comparative costs of wooden and steel penstocks fora hydro-electric power plant are as follows:First costAnnual operation and maintenanceLifeWoodP250,000P 1,20020 yearsSteel$350,000P 2,00040 yearsTaxes, 1.5%; depreciation, 5% sinking fund; expected return, 8%,Which would you select if given the choice?

A fund maintained to pay off future liabilities is known as a sinking fund. It helps in reducing the…

12-07 The comparative costs of wooden and steel penstocks for a hydro-electric power plant are as follows: Wood P250,000 First cost Annual operation and maintenance P 1,200 Life 20 years Steel P350,000 R2,000 40 years Taxes, 1.5%; depreciation, 5% sinking fund; expected return, 8 %, Which would you select if given the choice?

12-07 The comparative costs of wooden and steel penstocks for a hydro-electric power plant are as follows: Wood P250,000 First cost Annual operation and maintenance P 1,200 Life 20 years Steel P350,000 R2,000 40 years Taxes, 1.5%; depreciation, 5% sinking fund; expected return, 8 %, Which would you select if given the choice?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 10P: Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year...

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Its required to select one of the two machines, if you know that the firms MARR-12% and if the costs are shown below: Project A Project B Initial cost, $ 7650 12900 Maintenance cost, S/year 1200 900 Salvage value, $ 2000 Economic life, year 4 Compare the two-alternative using: 1-Equavlent Annual worth comparison. 2- Present worth comparison
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Using the following two relationships: AW = CR + A of AOC CR = -P(A/P,i,n) + S(A/F,i,n) %3D Calculate the Annual Worth (AW) based on the data for the following project: Corporate MARR = 10% Initial Investment Cost $1,000,000 Anticipated Project Life = 10 years Salvage Value at the end of 10 years $100,000 Annual Cost of Operation %3D $50,000 10% Compound Interest Factors
Q2. Suppose you are considering the following project with most-likely values: • Project life = 6 years Required investment= $1,000,000 • Salvage value = 80,000 • Depreciation method = 5-year MACRS • Sales volume = 65,000 units annually • Price per unit = $60 • Variable cost per unit - $40 • Fixed annual cost = $532,000 Tax rate = 35% • MARR = 20% (a) Compute the NPW for the most likely case showing all computations. (b) If you were told that the unit price, anmual sales volume, unit variable costs, and fixed costs are all accurate to within +15%, what would be the NPW in the best-case and in the worst case?
Q) Two possible routes for a power line are under study. Data on the routes are as shown in the following table: Option Information Around the Lake Under the Lake Length 15 km 5 km First Cost $5000 / km $25,000 /km Maintenance cost $200/km/yr $400/km/yr Useful Life (years) 15 20 Salvage Value $3000/km $5000/km Yearly power loss $500/km $500/km Annual Taxes 2% of the first cost 2% of the first cost If MARR = 10%, which alternative should you select? Justify your answer.
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You are considering an investment proj ect with the following financialin formation:(a) Required investment = $500,000(b) Project life= 5 years(c) Salvage value= $50,000(d) Depreciation method = s traight-line depreciation (no ha lf-year convention)(e) Unit price = $40(f) Unit variable cost = $18(g) Fixed annual cost = $230.000(h) Annual sales volume= I 00,000 units(i) Tax rate = 35%G) MARR = 15%Suppose the company is most concerned about the impact of its price estimate on the projects rate of return. How would you address this concern