Using present worth on incremental investment

Assignment Help Microeconomics

Reference no: EM13118885

It is estimated that the annual heat loss in a small factory is $12,000. Proposal 1 will reduce the heat loss by 68% and will cost $3,500. Proposal 2 will reduce the heat loss by 46% and will cost $2,200. For an interest rate of 12% and a lifetime of 10 years, which proposal should be selected?

Calculate your answer in three ways:

a. Using present worth on incremental investment

b. Using annual equivalent on incremental investment

c. Using IRR on incremental investment

Reference no: EM13118885

Questions Cloud

Explain how close does the proton get to the line of charge : An infinitely long line of charge has a linear charge density of 5.00×10−12 C/m. A proton is at distance 19.0 cm from the line and is moving directly toward the line with speed 2000 m/s. Explain how close does the proton get to the line of charge?

Illustrate the factors involved in the milankovitch cycles : Briefly describe and use diagrams to illustrate the factors involved in the Milankovitch cycles and why current warming trends seem different from natural cycles. Also, comment on how this may affect organisms in Savannah and Tundra biomes.

Calculate the concentrations of fe3+ : At a certain temperature, K = 9.1 10-4 for the following reaction. FeSCN2+(aq) Fe3+(aq) + SCN -(aq)

Find volume per month in order to break even : Fixed costs of $9,200 per month and variable costs of 70 cents per unit produced. Each item is sold to retailers at a price that averages 90 cents.

Using present worth on incremental investment : For an interest rate of 12% and a lifetime of 10 years, which proposal should be selected and calculate your answer in three ways

Find out the time taken by the projectile to hit point : A projectile is shot from the edge of a cliff 140 m above ground level with an initial speed of 100 m/s at an angle of 37 degrees with the horizontal. Find out the time taken by the projectile to hit point at ground level.

Manipulating an expression and solving equation : Very few situations in the real world fit a linear pattern or even a non-linear pattern perfectly. How can we tell if the algebraic model we are using fits the situation "good enough?"

Exchange between atmospheric and plant pools : Briefly discuss how global warming might affect carbon cycles in a polar and a temperate biome, especially with regard to exchange between atmospheric and plant pools, and sources and sinks.

How many moles of water can be produced : 2C4H10 + 13O2 → 8CO2 + 10H2O The equation shows the combustion of butane (C4H10). How many moles of water can be produced by 12.5 moles of C4H10 with excess oxygen.

User Account

All Pages