Reference no: EM132680326
A new furnace for your small factory will cost $35,000 and a year to install, will require ongoing maintenance expenditures of $2,300 a year. But it is far more fuel-efficient than your old furnace and will reduce your consumption of heating oil by 3,200 gallons per year. Heating oil this year will cost $3 a gallon; the price per gallon is expected to increase by $0.50 a year for the next 3 years and then to stabilize for the foreseeable future. The furnace will last for 20 years, at which point it will need to be replaced and will have no salvage value. The discount rate is 12%.
a. What is the net present value of the investment in the furnace? (Do not round intermediate calculations. Round your answer to the nearest whole dollar.)
b. What is the IRR? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
c. What is the payback period? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
d. What is the equivalent annual cost of the furnace? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
e. What is the equivalent annual savings derived from the furnace? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
f. Compare the PV of the difference between the equivalent annual cost and savings to your answer to part (a). Are the two measures the same or is one larger?
|
Calculate the value of hitech stock
: Calculate the value of HiTech stock when the required return is 12 percent.
|
|
Why is big data disrupting business systems
: Why is big data disrupting business systems? Based on a quick internet search, what business intelligence technologies are available?
|
|
Determine the gross profit to be reported
: Cost of merchandise sold and related items - Determine the gross profit to be reported on the income statement for the year ended June 30, 2012
|
|
Excluding the bill of rights
: Excluding the Bill of Rights, what has been the most important amendment to the US Constitution and why?
|
|
Net present value of the investment in the furnace
: What is the net present value of the investment in the furnace? (Do not round intermediate calculations. Round your answer to the nearest whole dollar.)
|
|
Calculate the stock price-hitech inc
: HiTech, Inc. has earnings per share of $1.82 and a P/E ratio of 31.54. Calculate the stock price. Explain calculations step by step and provide formulas used.
|
|
Which conditional rights should be reported on the statement
: Which Conditional rights should be reported on the statement of financial position? When a contract becomes unprofitable to an entity, this is called a(n)
|
|
Describe the physical controls to mitigate risks
: Information security uses administrative, technical (logical), and physical controls to mitigate risks related to organization's assets.
|
|
Compute the ratio of net sales to assets
: Kroger, a national supermarket chain, reported the following data - Total assets at end of year 23,211. Compute the ratio of net sales to assets
|