Annual equivalent expense for operating-maintaining furnace

Assignment Help Financial Management
Reference no: EM131300365

A small company heats its building and spends ?$7,800 per year on natural gas for this purpose. Cost increases of natural gas are expected to be 10?% per year starting one year from now? (i.e., the first cash flow is ?$8580 at EOY? one). Their maintenance on the gas furnace is ?$350 per? year, and this expense is expected to increase by 15?% per year starting one year from now? (i.e., the first cash flow for this expense is ?$402.50 at the EOY? one). If the planning horizon is 15 ?years, what is the total annual equivalent expense for operating and maintaining the? furnace? The interest rate is 18?% per year. The total annual equivalent expense for operating and maintaining the furnace is ?$ thousands.? (Round to two decimal? places.)

Reference no: EM131300365

Questions Cloud

What is the percentage change in price of these bonds : Both Bond Bill and Bond Ted have 11.6 percent coupons, make semiannual payments, and are priced at par value. Bond Bill has 6 years to maturity, whereas Bond Ted has 23 years to maturity. Both bonds have a par value of 1,000. If interest rates sudden..
Three-month european call options with strike price : The current price of a stock is $84, and three-month European call options with a strike price of $85 currently sell for $4.20. An investor who feels that the price of the stock will increase is trying to decide between buying 100 shares and buying 2..
Annual percentage increase in winner check over this period : In 1901, the first Green Jacket Golf Championship was held. The winner's prize money was $210. In 2015, the winner's check was $1, 550,000. What was the annual percentage increase in the winner's check over this period?
The implicit annual rate of return : You are reviewing your portfolio for which you know that 10 years ago you invested $17,850 in Amazon stock (AMZN). You are pleasantly surprised that the current value of the stock is $227,985. However, realizing that it was 10 years ago, you are inte..
Annual equivalent expense for operating-maintaining furnace : A small company heats its building and spends ?$7,800 per year on natural gas for this purpose. Cost increases of natural gas are expected to be 10?% per year starting one year from now? (i.e., the first cash flow is ?$8580 at EOY? one). what is the ..
Pay for the new fleet of cars if it remains all-equity firm : Zulu Car Rental Corporation is trying to determine whether to add 25 cars to its fleet. The company fully depreciates all its rental cars over 5 years using the straight line method. What is the maximum price that the company should be willing to pay..
For what share price is there margin call : A trader buys 100 shares of a stock on margin. The price of the stock is $30. The initial margin is 60% and the maintenance margin is 40%. How much money does the trader have to provide initially? For what share price is there a margin call?
At what period to maturity is the bond : You have a 20 year bond, coupon is 8%, compounded annually, market rate of interest is 7.5%, par value of $1000. However, you will receive a different coupon in the last 10 years. The PV of the bond is $987.69. What is the coupon rate for the last 10..
What should the arbitrageur do : The price of gold is currently $1,200 per ounce. The forward price for delivery in one year is $1,400. An arbitrageur can borrow money at 6% per annum. What should the arbitrageur do? Assume that the cost of storing gold is zero and that gold provide..

Reviews

Write a Review

Financial Management Questions & Answers

  What is the price of the bond-maturity has a coupon rate

A bond with 20 years until maturity has a coupon rate of 7.4 percent and a yield to maturity of 7.5 percent. What is the price of the bond?

  What is the firms breakeven point in units

Cranberry woods spends an average of $9.30 in labor and $12.60 in materials on every unit it sells. sales commissions and shipping amount to another $3.10. all other cost are fixed and add up to 136,000 per month. what's is cranberry's contribution? ..

  What is the equivalent monthly interest rate

A couple purchases a home and signed a mortgage for $240000 to be paid in equal monthly instalments over 25 years, with interest i^(2) = 0.18. What is the equivalent monthly interest rate i? What are the monthly payments?

  Calculate the return on holding the stock for a day

Obtain the closing price, the change in price from the previous day, and the beta and calculate the return on holding the stock for a day.

  Amount of a possible future contingency

Many firms believe that it is very difficult to estimate the amount of a possible future contingency. Should a contingent liability be reported even when the dollar amount of the loss is not known? Should it be disclosed in the notes to financial sta..

  What is the firms cost of its common stock

A firm's common stock is currently selling for $18 per share. The dividend expected to be paid at the end of the coming year is $1.74. Its dividend payments have been growing at a constant rate for the last four years. Four years ago, the dividend wa..

  Offer either to make a down payment or paying off the final

You bought a house for $130,000 using a 20 year mortgage at 5.5% interest to be paid monthly. What is your payment? Your parents agree to give you $10,000 toward your home. They offer either to make a down payment or paying off the final $10,000. A. ..

  What will be its earnings per share after the repurchase

CareMore Inc. earned net income of 5.2 million that it plans to use to repurchase shares of the firms common stock, which is currently selling for $46 a share. CareMore has 20 million shares of stock outstanding. What fraction of the firms shares can..

  The entire cost of the resort will be depreciated

You have paid $50,000 to a consulting firm to examine the purchase of Slippery Slope Ski Resort. The consultant’s report provides the following information: The selling price of Slippery Slope Ski Resort is $4,000,000. For tax purposes, the entire co..

  Calculate the net inflow or outflow as measured

MLC Audio is a U.S.-based MNC that has subsidiaries in three European countries. The subsidiaries frequently remit their earnings back to the parent company. Calculate the net inflow or outflow as measured in U.S. dollars this year.

  Compute the book value per share

We know the following about Bob & Co. Total assets are $1000m, E is $700m, cash is $500m and the # of shares is 1m. We estimate that the market value of equity is 2 times the book value of it. Finally, a fire sale of the firm would bring 70% of the v..

  What would be the total return of the bond in percent

A 6.60 percent coupon bond with 15 years left to maturity is priced to offer a 5.3 percent yield to maturity. You believe that in one year, the yield to maturity will be 6.0 percent. What would be the total return of the bond in dollars? What would b..

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