Find the payout period for the sprinkler system

Assignment Help Business Economics
Reference no: EM13998570

An office building and its equipment are insured to $7,100,000. The present annual insurance premium is $0.85 per $100 of coverage. A sprinkler system with an estimated life of 20 years and no salvage value can be installed for $180,000. Annual maintenance and operating cost is estimated to be $3,600. The premium will be reduced to $0.40 per $100 coverage if the sprinkler system is installed.

a. Find the rate of return if the sprinkler system is installed.

b. With interest at 12%, find the payout period for the sprinkler system.

Reference no: EM13998570

Questions Cloud

What is your total variable cost per acre : Assume you are a wheat farmer in North Central Kansas, you have fixed costs per acre of $84, variable cost per bushel is $3.64, and you produce 56 bushels per acre. What is your total variable cost per acre? What is your total cost per acre?
Purchase of one of two types of laser trimming devices : An electronics manufacturer is considering the purchase of one of two types of laser trimming devices. The sales forecast indicated that at least 8,000 units will be sold per year. Device A will increase the annual fixed cost of the plant by $20,000 ..
Under the topic of health as an input to production : Under the topic of health as an input to production,
The cost of producing a given level of output is minimized : The cost of producing a given level of output is minimized
Find the payout period for the sprinkler system : An office building and its equipment are insured to $7,100,000. The present annual insurance premium is $0.85 per $100 of coverage. A sprinkler system with an estimated life of 20 years and no salvage value can be installed for $180,000. Find the rat..
Should leave employment unchanged : Assume that for the last worker hired MPL=4, MR=2, and W=4, and if one more worker is hired MPL=3, MR=2, and W=4. Given this information, the firm- should leave employment unchanged, should increase employment.
Combinations of debt-equity financing mean : Combinations of debt-equity financing mean that a weighted average cost of capital (WACC) percentage rate (%) results. What is the WACC % for a purchase made with 1/3rd  of the total purchase made with a credit card (debt financing) at i=24% per year..
Changes in monetary policy : Assume that the Bank of Ecoville has the following balance sheet and the Fed has a 10% reserve requirement in place: Now assume that the Fed lowers the reserve requirement to 8%. What is the maximum amount of new loans that this bank can make? Assume..
Explain how the travel cost method : Explain how the travel cost method might be used to determine the value visitors place on their right to visit a national park?

Reviews

Write a Review

Business Economics Questions & Answers

  Afford to spend for a geothermal heat pump

A geothermal heat pum can save up to 84% of the annual heating and cooling bills of a certain home in the norotheaster US. In this region, the yearly cost of conventionally heating and cooling a 2,000 square foot house is about $2,900. The maximum am..

  After wage and price adjustments-ceteris paribus

Suppose that a country's workers are universally protected by COLA's and an adverse SAS shock, occurs. After wage and price adjustments, ceteris paribus, we find

  Explain the concept of comparative advantage

Explain the concept of comparative advantage and the principle theories of why trade occurs and analyze and discuss the sources of comparative advantage in national economies.

  Calculate the expected market price

You are the manager of a firm that sells a “commodity” in a market that resembles perfect competition, and your cost function is C(Q) = 2Q + 3Q2. Unfortunately, due to production lags, you must make your output decision prior to knowing for certain t..

  Alter the institution of slavery and the lives of slaves

How did political revolutions in the Atlantic Ocean basin affect or alter the institution of slavery and the lives of slaves? What were the long-term consequences of revolutionary ideologies for peoples of color?

  Informal and modern urban wage-traditional rural income

Consider the following distribution of income in a 12 person economy, with the modern urban wage=3, the traditional rural income=1 and the informal urban wage = 2: (1,2,3,1,2,3,1,2,31,2,1). the poverty line is at 1.3. What is the level of absolute po..

  Illustrate what is the price elasticity of demand for movie

Movie attendance dropped 8 percent as ticket prices rose a little more than 5 percent. Illustrate what is the price elasticity of demand for movie tickets. Could price elasticity be somewhat overestimated from these figures.

  Find the upper-lower bounds on the prices of european call

Find the upper and lower bounds on the prices of the European Call and the Put options and then find their ranges. (i.e. all possible values).

  Making the production process more capital-intensive

Suppose a union that represents some but not all of the employees in an industry is considering a strong push for increased pay for their members during the upcoming contract negotiations. However, they are concerned about the possibility that the co..

  Assume the demand for gasoline is perfectly inelastic

Assume the demand for gasoline is perfectly inelastic—i.e., the demand curve is vertical. If a tax is levied on the producers of gasoline, what percentage of the tax collection would be paid by the consumers of gasoline 0% or 100%? Explain.

  How are present values affected by interest rates

Present and future values for different interest rates. Find the following values. Compounding/discounting occurs annually. Round your answers to the nearest cent. An initial $700 compounded for 10 years at 18%. Define present value. The present valu..

  Information technology was primarily concerned

In the 1970s, information technology was primarily concerned with _______, while today information technology is the focus.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd