What is the net present value of the costs

Assignment Help Financial Management

Reference no: EM131853614

You would like to build a pipeline to transport natural gas from eastern Ohio to demand centers in the Northeast and potentially to ship it out of country as liquefied natural gas (LNG). The price you could get for shipping gas this distance is $0.50 per thousand ft3, based on estimated costs of shipping gas on competitor pipelines that ship gas the same distance. The cost of installing the 400 mile pipeline is $1.5 million per mile. This pipeline can ship 900 million ft3 per day, or 328,500 million ft3 per year. Annual costs in years 1 to 5 are $1,000,000 per year to operate and maintain the pipeline. What is the net present value of the costs and what is the net present value of the revenues assuming your interest rate is 10%? Will you be able to pay off the pipeline in 5 years? Assume the costs to build the pipeline occur all in year 0, and the costs to operate and the revenues of shipping the material occur in years 1 to 5. Ignore any years after 5.

Reference no: EM131853614

Questions Cloud

Retirement goal-annual inflation is expected : Annual inflation is expected to be 3%. He currently has $110,000 saved, and he expects to earn 8% annually on his savings.

Demanding specific performance of agreement on building : Glenda sues John demanding specific performance of the agreement on the building. Who will prevail? Why? Address all issues that are present.

Calculate aftertax cash flows for first year for each bond : How many of the zeroes would you need to issue? Calculate the aftertax cash flows for the first year for each bond.

Fractional return from covered interest arbitrage : Given the information in this question, the fractional return from covered interest arbitrage by U.S. investors is about ________.

What is the net present value of the costs : What is the net present value of the costs and what is the net present value of the revenues assuming your interest rate is 10%?

Deposit in account each year to fund your children education : The annual interest rate is 8 percent. How much money must you deposit in an account each year to fund your children's education?

Discuss several trends on the legal front : Some articles put together discuss several trends on the legal front.

Cash break-even accounting break-even financial break-even : This problem concerns the effect of taxes on the various break-even measures. Cash break-even Accounting break-even Financial break-even.

How could these issues affect ROEI and company profitability : What are some issues Uber faces if it classifies its drivers as employees? How could these issues affect ROEI and company profitability?

User Account

All Pages