Find the payout period for the sprinkler system

Assignment Help Business Economics
Reference no: EM13998570

An office building and its equipment are insured to $7,100,000. The present annual insurance premium is $0.85 per $100 of coverage. A sprinkler system with an estimated life of 20 years and no salvage value can be installed for $180,000. Annual maintenance and operating cost is estimated to be $3,600. The premium will be reduced to $0.40 per $100 coverage if the sprinkler system is installed.

a. Find the rate of return if the sprinkler system is installed.

b. With interest at 12%, find the payout period for the sprinkler system.

Reference no: EM13998570

Questions Cloud

What is your total variable cost per acre : Assume you are a wheat farmer in North Central Kansas, you have fixed costs per acre of $84, variable cost per bushel is $3.64, and you produce 56 bushels per acre. What is your total variable cost per acre? What is your total cost per acre?
Purchase of one of two types of laser trimming devices : An electronics manufacturer is considering the purchase of one of two types of laser trimming devices. The sales forecast indicated that at least 8,000 units will be sold per year. Device A will increase the annual fixed cost of the plant by $20,000 ..
Under the topic of health as an input to production : Under the topic of health as an input to production,
The cost of producing a given level of output is minimized : The cost of producing a given level of output is minimized
Find the payout period for the sprinkler system : An office building and its equipment are insured to $7,100,000. The present annual insurance premium is $0.85 per $100 of coverage. A sprinkler system with an estimated life of 20 years and no salvage value can be installed for $180,000. Find the rat..
Should leave employment unchanged : Assume that for the last worker hired MPL=4, MR=2, and W=4, and if one more worker is hired MPL=3, MR=2, and W=4. Given this information, the firm- should leave employment unchanged, should increase employment.
Combinations of debt-equity financing mean : Combinations of debt-equity financing mean that a weighted average cost of capital (WACC) percentage rate (%) results. What is the WACC % for a purchase made with 1/3rd  of the total purchase made with a credit card (debt financing) at i=24% per year..
Changes in monetary policy : Assume that the Bank of Ecoville has the following balance sheet and the Fed has a 10% reserve requirement in place: Now assume that the Fed lowers the reserve requirement to 8%. What is the maximum amount of new loans that this bank can make? Assume..
Explain how the travel cost method : Explain how the travel cost method might be used to determine the value visitors place on their right to visit a national park?

Reviews

Write a Review

 

Business Economics Questions & Answers

  Hypothesis of government regulation prior

Illustrate what way the U.S trucking organization exemplified the capture theory hypothesis of government regulation prior.

  What would be the business and economic profit

Susan Jones has a job as a pharmacist earning $45,000 per year, and she is deciding whether to take another job as the manager of another pharmacy for $55,000 per year or to purchase a pharmacy that generates revenue of $250,000 per year. What would ..

  Affected by the market value going up and down

If the par value of the common stock is 5 dollars and is sold at market for 10 dollars does the company get the extra $5? Also how is the company affected by the market value going up and down?

  Calculate the price and output for a monopoly

A market has linear market MC (might be supply) and demand curves. No one will buy the good if the price is above $200 and the firm will not produce the good if the price is below $20. Calculate the consumer surplus and producer surplus if this is a ..

  Assume which the benefit to the villagers of each additional

assume which the benefit to the villagers of each additional cow grazing on the commons declines as more cows graze

  Economy with rigid wages and prices would suffer

Confronted with an adverse supply shock, an economy with rigid wages and prices would suffer

  Suppose the demand for good

Suppose the demand for good X is Qdx=10-2Px + Py +M .the price of X is $1 the price of good Y is $10 and income is $100 given these prices and income how much of good X will be purchased?

  What is breakeven point in units of production

The annual fixed costs for a plant are$100,000.For production at 80% of the full capacity, the variable cost is$140,000 and the net sales is $280,000 if the selling price per unit is $40 Draw the breakeven chart. what is breakeven point in units of p..

  E-activity was solved using estimation-hypothesis testing

Discuss which economic theories or relationships you have studied up until now (not just in this class – in all your economics classes) that could be estimated using the multiple linear regression model. Explain your rationale.  Provide examples to s..

  How does a tax affect an individuals decision

How does a tax affect an individual’s decision? Consider the case of an individual who consumes two goods: bread and tortillas, both of which are initially free. Also, assume that the price of each good and the individual’s income are given

  Keynesian theory when should expansionary fiscal policy

According to Keynesian theory when should expansionary fiscal policy be used? How does this change GDP, unemployment and the price level?

  Standard normal distribution

Let the random variable Z follow a standard normal distribution.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd