Solution-Compare the present worth values of the

Compare the present worth values of the alternatives

Assignment Help Finance Basics

Reference no: EM133073156

The type of construction a contractor undertakes necessitates the purchase of equipment that will provide standby electrical power in its construction sites. Alternative A involves an initial cost of 572,000, a 9-year useful life, an annual cost of 52,200 the first year and increasing 5300 per year thereafter, and a net salvage value of $8,400 at the end of the useful life. Alternative B has an initial cost of 590.000, a 12-year useful life, annual costs of $2,100, and a net salvage value of $13.000. The current interest rate is 10% compounded annually

a) Which alternative is preferred based on the repeatability assumption? Compare the present worth values of the alternatives to justify your decision.

b) Compare the present worth values of Alternatives A and B over an infinite analysis period. Which alternative Is preferable?

Reference no: EM133073156

Questions Cloud

What is the industry average price-earnings ratio : What is the industry average price-earnings ratio? What is the price-earnings ratio for Ragan, Inc.? Is this the relationship you would expect between the two r

Predicts the performance of firms : Studies find that the stock market performance of a firm predicts the performance of firms that are economically linked to that firm (e.g., its suppliers).

Calculate the yield to maturity of a coupon bond : Calculate the yield to maturity of a coupon bond face value $30, 000, purchased for $15000.00 with an interest rate of 8% per annum that has 20 years to maturit

Assumptions of wacc while valuing a project : A company has experienced a steady growth of 9% per year in its annual dividend. This growth is expected to continue indefinitely. The last dividend paid was $

Compare the present worth values of the alternatives : a) Which alternative is preferred based on the repeatability assumption? Compare the present worth values of the alternatives to justify your decision.

Determine the average day inventory for zcc : Zakaryan Confections, Co. (ZCC) reported the following financial data for 2018 and 2017: Determine the average day inventory for ZCC

Straight-line depreciation of the sale price : Assume the Oklahoma City Thunder are sold for $520 million. If there is a 35% flat tax rate, how much would a 5-year straight-line depreciation of the sale pric

Explain the role of systems analysis and design : Explain the role of systems analysis and design in systems development and evaluates different design methods and methodologies

Calculate the amount that the bodyshop would raise : The Bodyshop has issued a bank-accepted bill to fund a short-term business project. The bill was issued for 180 days, with a face value of $1 800 000 and a yiel

User Account

All Pages

Compare the present worth values of the alternatives

Reference no: EM133073156

Reference no: EM133073156

Questions Cloud

Reviews

Write a Review

Finance Basics Questions & Answers

Financial reporting and analysis

A report on financial accounting

Describe the types of financial ratios

Differences between sole proprietorship and corporation

Prepare a cash budget statement

What are the implied interest rates

State pricing theory and no-arbitrage pricing theory

Small business administration

Effect of financial leverage

Evaluate the basis for the payment to the lender

Importance of opps, ipps, mpfs and dmepos

Time value of money

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT