Looking at two heating options for new research building

Assignment Help Financial Management
Reference no: EM131991688

Your company is environmentally conscious and is looking at two heating options for a new research building. What you know about each option is below, and your company will use an annual interest rate of 8% for this decision: Gas Heating Option: The initial equipment and installment of the natural gas system would cost $225,000 right now. The maintenance costs of the equipment are expected to be $2,000 per year, starting next year, for each of the next 20 years. The energy cost is expected to be $5,000, starting next year, and is expected to rise by 5% per year for each of the next 20 years due to the price of natural gas increasing. Geothermal Heating Option: Because of green energy incentives provided by the government, the geothermal equipment and installation is expected to cost only $200,000 right now, which is cheaper than the gas lines. There would be no energy cost with geothermal, but because this is a relatively newer technology, the maintenance costs are expected to be $15,000 per year, starting next year, for each of the next 20 years. Which is the lower cost option for the company?

Reference no: EM131991688

Questions Cloud

How would you relate association and causation : How would you relate association and causation? Are these terms the same thing? How could an epidemiological study prove causation? Other than the examples.
Requires chemical finishing process for product : Dynamic Corporation requires a chemical finishing process for a product under contract for a period of six years.
Define what wholesome food is to you : Define what wholesome food is to you and what makes a food wholesome or unwholesome.
What is the root cause of global poverty : What is the root cause of global poverty? Which agencies are best suited to solve these problems?
Looking at two heating options for new research building : Your company is environmentally conscious and is looking at two heating options for a new research building.
Contribute to sustainable development : Explain how economic well-being, environment and ethics all interact to contribute to sustainable development.
Assess the value and importance of a pest analysis : Assess the value and importance of a PEST Analysis as a tool for mentoring and evaluating the macroenvironment. Provide at least two (2) specific examples.
Looking at two heating options for new research building : Your company is environmentally conscious and is looking at two heating options for a new research building.
Why analysts might make an adjustment of this type : Cannon Corp., a textile manufacturer, reported net income of $258,000 in 2017. discuss why analysts might make an adjustment of this type.

Reviews

Write a Review

Financial Management Questions & Answers

  Break-even sales figure given is the accounting break-even

Assuming the break-even sales figure given is the accounting break-even, what is the cash flow per plane?

  What was the face value

Lori Koetters was looking at different simple discount notes available to her. She found a note that would cost her $135 in interest at 8% for 60 days. What was the face value?

  What is his portfolio beta

$47,500 is invested in Stock A with a beta of 0.75 and the remainder is invested in Stock B with a beta of 1.42. What is his portfolio's beta?

  Amortization schedule

Set up an amortization schedule for a $42,000 loan to be repaid in equal installments at the end of each of the next 3 years. The interest rate is 6% compounded annually. Round all answers to the nearest cent. What percentage of the payment represent..

  Required to compute the taxable benefit where necessary

Advise both Charlie and Shine Homes about their fringe benefit consequences of these events. You are required to compute the taxable benefit where necessary.

  Options premium each node for both put and call options

Compute the options premium each node for both the put and call options.

  How much can average annual inventory be reduced

DPZ company has an inventory of $ 200,000 and an average annual cost of Goods sold of $ 720,000. The president of the company believes that the annual inventory turnover ration can be increased to 8.0 if that happens , by now how much can average ann..

  All-equity plan and levered plan

Yasmin Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, Yasmin would have 180,000 shares of stock outstanding. Under Plan II, there would be 130,000 shares of stock out..

  Require premium on seaside builders bonds

Why do investors require a premium (higher rate of return) on Seaside Builders’ bonds?

  Compute the value of this stock with required return

Compute the value of this stock with a required return of 11.1 percent.

  Compare interest rate parity and purchasing power parity

Comparing parity theories. Compare and contrast interest rate parity, purchasing power parity (PPP), and the international Fisher effect (IFE).

  Company also has two bond issues outstanding

Dinklage Corp. has 5 million shares of common stock outstanding. The current share price is $71, and the book value per share is $6. The company also has two bond issues outstanding. The first bond issue has a face value of $65 million, a coupon of 6..

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