Produce and sell electricity to the local electric utility

Assignment Help Business Economics
Reference no: EM136323

Q. In 2020, Ahmed decides to invest in a wind turbine that would produce and sell electricity to the local electric utility. He decides to buy a smaller, used turbine. It will cost $1841 to purchase the turbine this year, and another $582 in parts and labor will be needed this year to get this ready for service. After 5 years of use (and during year 2026), he estimates that it will cost $748 to rebuild the turbine and there will be no revenue from production that year. Ahmed estimates that the net cash flows (after depreciation and taxes) will be $559 each year in years 2021, 2022, 2023, 2024, 2025 and $687 each year in years 2027, 2028, 2029, and 2030. The turbine will be taken out of service at the end of year 2030 and there will be no salvage value. The Minimum Acceptable Rate of Return (MARR) (the interest rate) is 8 percent per year, compounded annually. What is the Benefit/Cost ratio of this turbinein year 2020)? (Express your answer to two decimal places of accuracy.) Benefit/Cost ratio = ?

Reference no: EM136323

Questions Cloud

Annual operating and maintenance expenses : The annual operating and maintenance expenses are estimated to be $1,000. If Convington's MARR is 15%, how many years will it take before this machine becomes profitable.
Percentage gap between the steady-state ratio : Use the 2007 numbers in the first column to compute, for each of the four countries, the percentage gap between the steady-state ratio.
International trade protectionism : In this forum we discuss the different arguments that are made in favor of international trade protectionism and the important role of the politics of protectionism.
Congress authorizes a tariff on imported steel : The election of a new Congress causes consumer confidence to soar as expectations of future economic growth are solid.
Produce and sell electricity to the local electric utility : In 2020, Ahmed decides to invest in a wind turbine that would produce and sell electricity to the local electric utility. He decides to buy a smaller, used turbine.
The short-run and long-run effects : The short-run and long-run effects of this change for the levels of per-capita output, and the growth rates of (total) output and per-capita output.
Foundation for modern economic growth : When and where did modern economic growth first happen. What are the major institutional factors that form the foundation for modern economic growth. What do they have in common.
Revert to the nash equilibrium : Suppose the firms compete in quantities. If firm 1 deviates from collusion in one period, what is the profit of firm 1 in that period in subsequent periods.
Bureau of labor statistics classify : If you are near graduation and plan to start your new job in 3 weeks, how does the Bureau of labor statistics classify you? Unemployed, employed or notin labor force.

Reviews

Write a Review

Business Economics Questions & Answers

  Relationship between marginal cost and marginal revenue

What is the relationship between marginal cost and marginal revenue when single-price monopoly maximize profit.

  Provide tax relief for households while still balancing

In an effort to provide tax relief for households while still balancing the budget, Congress votes to raise business taxes and decrease personal taxes.

  Difference between microsoft and software retailers

The biggest difference between Microsoft and software retailers is the market structure in which they operate.

  Adopting a dividend policy

If the company has not paid dividends, discuss why think the company is not paying dividends or whether they should consider adopting a dividend policy.

  Divide the banzhaf power index

Divide the Banzhaf power index by the number of votersin state. Are votersin small states or are votersin big state more powerful, according to this measure.

  Typographical errors occur andomly

If typographical errors occur andomly, about how many pagesin book have three typographical errors. What is the median number of typographical errors per page.

  Case study: fisher-price toys

The case study of the Fisher-Price Toys, Inc., a popular case in basic economics and management from the prestigious Harvard Business School.

  Economic profit or loss

What was the accounting profit for the new business. What was the economic profit or loss. Explain your calculations for both questions.

  Draw a graph of the market for chewing gum

Draw a graph of the market for chewing gum. What are the equilibrium price and quantity? Mark the equilibrium price and quantity in the graph.

  Business magazine that computer firms

You read in a business magazine that computer firms are reaping high profits. Assume that the computer market is perfectly competitive.

  Demand and supply curves

Economics is the study of the principles governing the allocation of scarce means among competing ends when the objective of the allocation is to maximize the attainment of the ends.

  Tootsie roll company to analyze their production process

One day you realize you're tired of smelling like refried beans all the time and begin thinking about starting your own business. After doing some investigation you decide to spend 15 hours per week running a photocopy service in your dorm.

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