Estimates for four alternative building locations

Assignment Help Finance Basics
Reference no: EM13881960

Caterpillar Corporation wants to build a spare parts storage facility in the Phoenix, Arizona, vicinity. A plant engineer has identified four different location options. The initial cost of earthwork and prefab building and the annual net cash flows estimates are detailed in Table 8-5. The annual net cash flows series vary due to differences in maintenance, labor costs, transportation charges, etc. If the MARR is 10%, use incremental ROR analysis to select the one economically best location.

Estimates for Four Alternative Building Locations.

 

A

B

C

D

Initial cost, $

-200,000

-275,000

-190,000

-350,000

Annual cash fl ow, $ per year

-22,000

-35,000

-19,500

-42,000

Life, years

30

30

30

30

Reference no: EM13881960

Questions Cloud

What is known about the rate of return on the increment : What is known about the rate of return on the increment of investment between the two alternatives? If the MARR is 12%, which alternative should be selected and why?
Determine which manufacturer offers the best economic choice : Annual cost estimates are expected to be high to ensure readiness at any time. Use a spreadsheet and incremental ROR analysis to determine which manufacturer offers the best economic choice.
What will the monthly payments have to be : You need to save $50,000 in 10 years from today. You want to make annual payments at the end of each year into a sinking fund that will earn interest at an annual rate of 10 percent. What will the annual payments have to be? What will the monthly pay..
Life insurance policy-no mortgage is assumed : Theo is a consultant who earns 72,000$ annually. His wife, Julia is a homemaker and theey have one child, Ben. Theo is covered by 200,000$ life insurance policy. The couple assumes an annual inflation rate of 3%. How would you design a finance plan f..
Estimates for four alternative building locations : Caterpillar Corporation wants to build a spare parts storage facility in the Phoenix, Arizona, vicinity. Estimates for Four Alternative Building Locations
Fixed asset will be depreciated straight-line to zero : Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.94 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be w..
Callable bond outstanding on the market : Fooling Company has a 10.8 percent callable bond outstanding on the market with 25 years to maturity, call protection for the next 10 years, and a call premium of $100. What is the yield to call (YTC) for this bond if the current price is 105 percent..
Homeowners insurance policy for the condominium : Frank made some inquiries and found a lender that has pre-approved him for a $125,000, 30-year mortgage @ 5% interest, with 10 percent down. A condominium in a nearby town, listed for $120,000.00, is 10 miles closer to his job, and is located in a ni..

Reviews

Write a Review

Finance Basics Questions & Answers

  The question is choose an item that you would like to

the question is choose an item that you would like to manufacture. you do not actually need to manufacture something

  Derive and explain the monetary approach to exchange rate

derive and explain the monetary approach to exchange rate

  Rings purchased cost per ring total cost

What was the dollar amount for ending inventory using FIFO, LIFO, and average cost methods? What is the impact on the balance sheet when using different methods of accounting for inventory?

  From the e-activity examine the derivatives that were

derivativesplease respond to the followingfrom the e-activity examine the derivatives that were involved in the

  Determine the contribution per unit

After spending $300,000 for research and development, chemists at Diversified Citrus Industries have developed a breakfast drink. The drink, called Zap, will provide the customer with twice the value of Vitamin C currently available in breakfast drin..

  Comprehensive problem on amortization

First January 2006, Maple Leaf Company reported the following property, plant, equipments. Compute amount of amortization expense for 2006 in respect of each asset given above under straight line method.

  Computations of cash flow

If, at the end of project life, a piece of machine having a book value of $4,000 is expected to bring $3,000 upon resale, and income tax rate is 40 percent,

  If you start with 100000 in investment capital calculate

mutual funds can effectively charge ales fees in one of three ways front-end load fees 12b-1 fees or deferred load

  What are some considerations a company should take

What are some considerations a company should take into account when establishing dividend policy?

  Write the equation expressing the present value

Julie Orzabal deposits $5,000 in a savings account offering 5.125 percent compounded daily. Assuming she makes no further deposits, what will be the balance in her account after 5 years?

  Capital markets securities investment categories

Next, select, describe, and defend your selections of Capital Markets Securities investment categories that would be suitable given the policy parameters and constraints of your directives. With regard to your securities selections:

  What will be the beta of indell stock after this transaction

Indell stock has a current market value of $120 million and a beta of 1.50. Indell currently has risk-free debt as well. The firm decides to change its capital structure by issuing $30 million in additional risk-free debt, and then using this $30 mil..

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