Expand their facilities to accommodate new production

Assignment Help Business Economics

Reference no: EM131002443

Acme Inc., needs to expand their facilities to accommodate a new production, line, The investment is $ 1 million dollar, and 80% is financed through the bank for 10 years at an annual interest of 10%. Since the company will invest 20% equity money (own money), the bank has agreed that the first payment of the loan will be done until the end of second year and with nine equal annual payments. The project will incur during the first year in annual operating and maintenance costs of $31,000, which will increase 10% per year. The project will also generate additional income during the first year of $90,000 and it is expected that will increase 20% each subsequent year. Using a MARR of 8% and a planning horizon of 10 years, recommend to the company if they should invest in the project. Use as measures of performance PW, AW, and IRR. Based on your analysis and results, you may suggest to the company further actions in order to reconsider the project.

Reference no: EM131002443

Questions Cloud

Researchers in leading chemical manufacturing company : The year-end bonuses of cash, stock and stock options (in thousands of US dollars) given to senior technical researchers in a leading chemical manufacturing company, each year over a ?ve-year period from 1990-1994, has a lognormal distribution wit..

The blood is mixed with a form of chemical : When someone donates blood, the blood is mixed with a form of chemical called an anticoagulant. What do you think an anticoagulant is and how is it helpful to the storage of blood for future use?

Calculate the present worth of the investment : A textile firm in Argentina proposes you an investment for a period of 5 years. The initial investment is 100,000, the expenses for the first year are $10,000 (then-current) and will increase (due to usage of equipment) at rate of 10% per year. calc..

Discuss the importance of health care information systems : Discuss the importance of health care information systems to health care professionals. Discuss four of the major health information systems and their use

Expand their facilities to accommodate new production : Acme Inc., needs to expand their facilities to accommodate a new production, line, The investment is $ 1 million dollar, and 80% is financed through the bank for 10 years at an annual interest of 10%. Since the company will invest 20% equity money (o..

Probability that the paediatrician records : Determine the probability that the paediatrician records exactly 3 misdiagnoses in a year; determine also the probability of recording 3 or fewer misdiagnoses.

What two body systems provide the regulation : What two body systems provide the regulation and control of all other body systems that is necessary for homeostasis?

The absolute value of the price elasticity of demand : Suppose the price of airfare from SFO to JFK increases from $330 to $360 while no other variables change. In consequence, the quantity of tickets sold decreases from 180 to 140. Calculate the absolute value of the price elasticity of demand. (Hint: u..

How much heat is required to convert : A)How much heat is required to convert 14.0 g of ice at -12.5oC to steam at 100.0oC ? Express your answer in joules.

User Account

All Pages