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

  Cross-cultural opportunities and conflicts in canada

Short Paper on Cross-cultural Opportunities and Conflicts in Canada.

  Sociology theory questions

Sociology are very fundamental in nature. Role strain and role constraint speak about the duties and responsibilities of the roles of people in society or in a group. A short theory about Darwin and Moths is also answered.

  A book review on unfaithful angels

This review will help the reader understand the social work profession through different concepts giving the glimpse of why the social work profession might have drifted away from its original purpose of serving the poor.

  Disorder paper: schizophrenia

Schizophrenia does not really have just one single cause. It is a possibility that this disorder could be inherited but not all doctors are sure.

  Individual assignment: two models handout and rubric

Individual Assignment : Two Models Handout and Rubric,    This paper will allow you to understand and evaluate two vastly different organizational models and to effectively communicate their differences.

  Developing strategic intent for toyota

The following report includes the description about the organization, its strategies, industry analysis in which it operates and its position in the industry.

  Gasoline powered passenger vehicles

In this study, we examine how gasoline price volatility and income of the consumers impacts consumer's demand for gasoline.

  An aspect of poverty in canada

Economics thesis undergrad 4th year paper to write. it should be about 22 pages in length, literature review, economic analysis and then data or cost benefit analysis.

  Ngn customer satisfaction qos indicator for 3g services

The paper aims to highlight the global trends in countries and regions where 3G has already been introduced and propose an implementation plan to the telecom operators of developing countries.

  Prepare a power point presentation

Prepare the power point presentation for the case: Santa Fe Independent School District

  Information literacy is important in this environment

Information literacy is critically important in this contemporary environment

  Associative property of multiplication

Write a definition for associative property of multiplication.

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