Illustrate the calculations and a brief explanation

Assignment Help Other Subject
Reference no: EM133171244

Investment Appraisal Techniques

A construction company has two alternative schemes to improve its property portfolio. Scheme ‘A' involves a complete modernisation of buildings which will cost £2,500,000 now. Annual operation and maintenance charges will amount to £125,000 per year. Scheme ‘B' would involve investing £1,000,000 now and the remainder of the work carried out in 5 years for £1,700,000. In this alternative scenario, annual operating and maintenance charges will be £150,000 per year for the first 5 years and £125,000 per year there after.

For this purpose, you are required to calculate the Net Present Value (NPV) and the Equivalent Annual Cost (EAC) for both schemes and advise the client on the most appropriate option. Assume an annual interest rate of 7% and an asset life of 30 years for both schemes. Your answer needs to clearly illustrate the calculations and a brief explanation as to which option should be prioritised and why.

You would need to submit the documents for this assignment: calculations part in EXCEL format, and written part in word format

Reference no: EM133171244

Questions Cloud

Evolving nature of information systems : Ealuate the role and evolving nature of information systems in a variety of dynamic business environments - Write a short paragraph with at least two
Discuss the three sectors : Question - Discuss the three sectors and what is supplied from and to these three sectors from the company Berkshire Hathaway
Prepare the lease payments schedule for scooby ltd : Initial direct costs for setting up the lease were incurred by both parties: $1 595 for Scooby Ltd and $2731 for Shaggy Ltd. Prepare the lease payments schedule
How the liability to the lessor should be represented : Also show how the liability to the lessor should be represented in the statement of financial position of Granpa Ltd on June 30, 2020
Illustrate the calculations and a brief explanation : Illustrate the calculations and a brief explanation as to which option should be prioritised and why.
Computing depreciation for partial years : Computing Depreciation for Partial Years - A company with a calendar year-end purchases a machine costing $283,800 on July 1, 2020
What is the amortized cost of the instrument on december : On January 2, 2018, Estrella Company originates a 10-year 7% P4,000,000. What is the amortized cost of the instrument on December
How many shares were outstanding at year-end : At the beginning of current year an entity had 250,000 shares issued which included 50,000 shares held as treasury. How many shares were outstanding at year-end
What are some of the negative consequences to bat : What are some of the negative consequences to BAT for not telling the truth? What are some of the negative consequences to BAT for telling the truth

Reviews

Write a Review

Other Subject Questions & Answers

  The importance of a good research question

Why do you think an examination of the variables is important when writing the research questions and hypothesis in a quantitative study?

  What causes delinquency

What causes delinquency and how can we best prevent it? What factors increase the risk of becoming involved in delinquency?

  Theoretical analysis of a specific

Students will complete an integrative project that includes a background report, interview and theoretical analysis of a specific, target topic related to the development of human sexuality, gender identity, gender roles, sexually transmitted dise..

  Discuss incident mitigation strategies

In the past five years, there have been several lone wolf/violent extremist attacks on U.S. citizens. Select and discuss one incident.

  Calculate the modified duration using paid claims

Fundamentals of Actuarial Practice: Interim Assessment Questions - Calculate the modified duration using paid claims as the liability cash flows

  Develop a small application that examines all the pictures

Your team has been tasked to develop a small application that examines all the pictures in a user's photo library. The application identifies pictures.

  Discuss sexual dimorphisms of the mammalian brain

Compare set-point and positive-incentive theories of hunger and eating. Compare their ability to predict two major research findings.

  Many conservatives believe that this is the number

What is your opinion. Many conservatives believe that this is the number one problem in America. Are they right?

  Discuss either two civil liberties or two civil rights event

Discuss either two (2) civil liberties or two (2) civil rights events (past or current) that have influenced a sense of social responsibility in the American

  Discuss effect that religious belief has on people happiness

Discuss the effect that religious belief has on people's happiness or unhappiness as it relates to their behaviors and attitudes.

  Choose two of the theories below to compare

Choose two of the theories below to compare and contrast thoroughly. Be sure to include what makes them similar, as well as what makes them different, and where you believe each could be applied most appropriately within an organization based on y..

  Systematic study of human society

According to Macionis (2011), sociology is the systematic study of human society, within which falls the sociological perspective. Based upon your textbook reading, how might you use the sociological perspective if you were visiting a different count..

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