Solve using annual equivalent cost analysis

Assignment Help Financial Management

Reference no: EM131354579

SOLVE USING Annual Equivalent Cost analysis

The senior Engineer at Engineering Services Incorporated is evaluating alternatives to supply electricity to one of the company’s new project. He is willing to pay $3 million for electricity purchased from the local utility at the end of the first year and estimates that this cost will increase thereafter at $300,000 per year. He desires to know if he should build a 4000 - kilowatt power plant. His operating costs (other than fuel) are estimated to be $130,000 per year. He is considering two alternative fuels Wood: Installed cost of the power plant is $1200/kW. Fuel consumption is 30,000 tons per year. Fuel cost for the first year is $20/ton and is estimated to increase at a rate of $2/ton for each year after the first. No salvage value b.Oil: Installed cost is $1000/kW. Fuel consumption is 46,000 barrels per year. Fuel cost is $34 per barrel for the first year and is estimated to increase at $1/barrel per year for each year after the first. No salvage value.

Reference no: EM131354579

Questions Cloud

Sold at the breakeven volume of ultraguard collars : There is excitement in the air! The new UltraGuard flea collar is about to be introduced to the market. The collar will feature enhanced protection, increased longevity and is environmentally friendly. It will be priced at $9.45 and has unit variable..

What is the value of the bondholders call option : A 12-year maturity convertible bond with a face value of $1,000 and a 6% coupon on a company with a bond rating of Aaa is selling for $1,140. The bond pays interest annually. Each bond can be exchanged for 20 shares, and the stock price currently is ..

Dividend is expected to grow at constant rate : Holtzman Clothiers' stock currently sells for $27 a share. It just paid a dividend of $1.25 a share (i.e., D0 = $1.25). The dividend is expected to grow at a constant rate of 9% a year. What stock price is expected 1 year from now? What is the requir..

What will the price per share be after the dividend : You own 400 shares of stock value at 17 a share. The stock just declared a 10% dividend how many shares will you own and what will the price per share be after the dividend?

Solve using annual equivalent cost analysis : The senior Engineer at Engineering Services Incorporated is evaluating alternatives to supply electricity to one of the company’s new project. He is willing to pay $3 million for electricity purchased from the local utility at the end of the first ye..

Current market rate for this type and quality of bond : You purchased a 15 year bond at par value when it was initially issued 2 yrs ago. This bond has a coupon rate of 7% and matures 13 yrs from now. If the current market rate for this type and quality of bond is 8.25% than you should expect ---- -

Purchase vacation home : A client of yours wants to purchase a vacation home in Avalon Park, Florida in twenty years time for cash. The house is currently valued at $200,000 and the price is expected to rise on average at 3% per year for the full period. In order to buy that..

Types of insurance should he consider dropping : Bruce’s 2003 Chevrolet Malibu is pretty old now, and its resale value is low. Since he is always interested in saving insurance premium dollars when appropriate, which of the following types of insurance should he consider dropping??

Company strategy can be consider ethical : A Company's strategy can be consider "ethical". if each element of its strategy is "legal". if its actions and behaviors fall within the bounds of "fair competition".

User Account

All Pages