What is the present worth of the project

Assignment Help Financial Management

Reference no: EM131989467

Southern Ontario is planning to build a new solar power station. The project will start in 2023 and is planned to take 3 years at a cost of $150 million per year.

After project completion, the cost of maintenance and repairs is expected to be $10 million for the first year, and to increase by $100,000 per year thereafter.

The salvage/scrap value of the station at the end of year 2060 is estimated to be $30 million. The new solar station is expected to save the city $45 million per year. Consider the present to be the end of 2016/beginning of 2017 and the interest rate to be 6%.

a) Draw a cash flow diagram for this project (from present till end of year 2060).

b) What is the Present Worth of the project?

c) What is the Future Worth of the project?

d) Is it a good investment for the city to make?

Reference no: EM131989467

Questions Cloud

Potential chaos of the database processing environment : What database administration functions help bring order to the potential chaos of the database processing environment?

How much higer or lower if the effective annual rate charged : Southwest bank offers to lend you 50,000 at a nominal rate of 7.2% compounded monthly. the loan principal plus interest must be repaid at the end of the year.

Maintain an association between a product and a brand : What is an example of a product that does not have a brand associated with it? Why is it important to maintain an association between a product and a brand?

Art of creating a brand that can show the potential customer : When you read about positioning a brand this is the art of creating a brand that can show the potential customer the brands relevance to a customer

What is the present worth of the project : Southern Ontario is planning to build a new solar power station. The project will start in 2023 and is planned to take 3 years at a cost of $150 million.

Represent superior quality and performance : Do you feel these brands represent superior quality and performance and are worth the price? If not, why not?

Write sentence or more advising management of eastern shore : Write a sentence or more advising the management of Eastern Shore Milky Way company about what this data means, and what action(s) it should take as a result.

Show the euac values used to make your decision : Analyze this using an EUAC measure and a MARR of 15% to see if the concrete mixer should be replaced if the old mixer is sold for its market value of $65,000.

John locomotive works manufactures a model locomotive : John's Locomotive Works manufactures a model locomotive. It comes in two versions--a standard (S), and a deluxe (D).

User Account

All Pages