Reference no: EM132027581
You are thinking of making an investment in a new factory. The factory will generate revenues of $1,110,000 per year for as long as you maintain it.
You expect that the maintenance costs will start at $58830 per year and will increase 5% per year thereafter. Assume that all revenue and maintenance costs occur at the end of the year. You intend to run the factory as long as it contrinues to make a positive cash flow ( as long as the cash generated by the plant exceeds the maintainenance costs).
The factory can be built and become operational immediately and the interest rate is 6% per year.
a/ what is the present value of the revenues
b/ what is the present value of the maintenance costs?
c/ if the plan costs $11,100,000 to build, should you invest in the factory?
You are thinking of making an investment in a new factory.
The factory will generate revenues of 0,000 per year for as long as you maintain it.
You expect that the maintenance costs will start at $58, 830 per year and will increase 5% per year thereafter, Assume that all revenue and maintenance costs occur at the end of the year, You intend to run the factory as long as it continues to make a positive cash flow (as long as the cash generated by the plant exceeds the maintenance costs).
The factory can be built and become operational immediately and the interest rate is 6% per year. What is the present value of the revenues?
What is the present value of the maintenance costs? If the plant costs $11, 100,000 to build, should you invest in the factory?
|
What are the salvage values for choices b and c
: Using the least common Multiple planning horizon approach what are the salvage values for choices B and C?
|
|
Analyze what is the price of the stock today
: The dividends are expected to grow at 35 percent for the next 10 years and then level off to a 7 percent growth rate indefinitely.
|
|
What interaction would you have as you seek advice
: What interaction would you have as you seek advice from your senior accountant and communicate with your client?
|
|
Which one retirement plans should you choose
: You have three choices of retirement plans: a) $1 million at the end of 20 years,
|
|
What is the present value of the maintenance costs
: You are thinking of making an investment in a new factory. The factory will generate revenues of $1,110,000 per year for as long as you maintain it.
|
|
What is your internal rate of return on the investment
: You are thinking about letting a friend borrow $10,000 today given that she will repay you $15,000 in 5 years.
|
|
How much is in savings at the end of this time
: A $10,000 deposit is made in a Savings account. For the first 4 years the interest rate is 3% per year. At the end of the fourth year a $5,000 withdrawal.
|
|
Which of these two plans would you recommend
: Issue $90 million immediately in debt, repay $20 million of its principal in one year, $20 million in two years and maintaining the remaining $50 million.
|
|
What is the internal rate of return on the incremental
: If you drive 14,000 miles per year and gasoline costs $4.00 per gallon, what is the internal rate of return on the incremental investment in the hybrid automobi
|