Reference no: EM133012312
A new furnace for your small factory is being installed right now, will cost $47,000, and will be completed in one year. At that point, it will require ongoing maintenance expenditures of $1,500 a year. But it is far more fuel-efficient than your old furnace and will reduce your consumption of heating oil by 4,400 gallons per year. Heating oil this year costs $2 a gallon; the price per gallon is expected to increase by $0.50 a year for the next 3 years and then to stabilize for the foreseeable future. The furnace will last for 20 years from initial use, at which point it will need to be replaced and will have no salvage value. (Specifically, the firm pays for the furnace at time 0, and then reaps higher net cash flows from that investment at the end of years 1 - 20.). The discount rate is 8%.
Problem a. What is the net present value of the investment in the furnace?
Problem b. What is the IRR?
Problem c. What is the payback period?
Problem d. What is the equivalent annual cost of the furnace?
Problem e. What is the equivalent annual savings derived from the furnace?
Problem f. Compare the PV of the difference between the equivalent annual cost and savings to your answer to part (a). Are the two measures the same or is one larger?
How much is that bond worth
: How much is that bond worth, if you assume the relevant long term interest rate if 5%? You've just purchased a Government Infrastructure Bond
|
Find what is the value of the factory
: You forecast that it will produce cash inflows of $125,000 in year 1, $185,000 in year 2, and $310,000 in year 3. The discount rate is 11%. What is the value
|
How much percentage of the irr comes from cash flows
: 45,000 leasable square feet. How much percentage of the IRR comes from cash flows from operations and how much from sale for each financing choice?
|
Calculate the amount of net-working capital
: Calculate the amount of net-working capital. Carly Inc. reports stockholders' equity of $136,900. The firm carries current liabilities of $71,400.
|
What is the equivalent annual savings derived from furnace
: What is the net present value of the investment in the furnace? A new furnace for your small factory is being installed right now, will cost $47,000
|
Calculate the firm net new long-term debt added
: Calculate the firm's net new long-term debt added during the year. During the year, Belyk Paving Co. had sales of $2,320,000. Cost of goods sold, administrative
|
Discuss the assumptions needed for warder to correctly
: Discuss the assumptions needed for Warder to correctly exclude the previously mentioned items from the December 31, 2019, current liabilities.
|
Which is the best example of direct agency costs
: Which is the best example of direct agency costs? When you engage a mortgage broker to find the best mortgage rates, this is an example of a/an
|
What is a timesheet and describe its importance
: How can you present a roster, in what formats and what should the roster detail?
|