### Recommend new heating system to commercial building owner

Assignment Help Financial Management
##### Reference no: EM131027067

A mechanical engineer must recommend a new heating system to a commercial building owner. The owner intends to sell the building in 15 years. A gas fired furnace option has a design life of 5 years, an initial cost of \$12,000, a replacement cost of \$6,000 and annual operating costs of \$3,500, but adds no value to the building when sold. A geothermal heat pump system has a design life of 10 years, an initial cost of \$18,000, a replacement cost of \$9,000, annual operating costs of \$2,500, and increases the value of the building by \$5,000, when it is sold at the end of year 15. Determine the PW of costs for the option the engineer should recommend at an interest rate of 5.6%. Express your answer in \$ to the nearest \$100.

### Write a Review

#### Calculate the cost-use of material sold for the material

Calculate the cost-use of material sold for the material(energy): Based on the following evaluation methods: - FIFO - HIFO - LIFO - average price

#### What is the before-tax cost of capital for debt financing

Black Hill Inc. sells \$100 million worth of 18-year to maturity 7.58% annual coupon bonds. The net proceeds (proceeds after flotation costs) are \$972 for each \$1,000 bond. What is the before-tax cost of capital for this debt financing?

#### Projections given for price-quantity-variable costs

We are evaluating a project that costs \$972,000, has a four-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 88,800 units per year. Suppose the projections giv..

#### Considering changing its capital structure

Pennewell Publishing Inc. is a zero growth company. It currently has zero debt and its earnings before interest and taxes are \$90,000. PP's current cost of equity is 10%, and its tax rate is 40%. The firm has 10,000 shares of common stock outstanding..

#### Relationship between resources commanded by an individual

The relationship between resources commanded by an individual and that individual’s level of well-being is given by A. The marginal rate of substitution. B. The production function. C. The utility function. D. The rate of transformation function.

#### Number of outstanding shares prior to a repurchase

The price of a stock prior to a repurchase id 50.0 if the number of outstanding shares prior to a repurchase is 100,000 shares, how many shares were repurchased using \$200000 cash?

#### When interest rates fall-bond prices on outstanding issues

When the required rate of return on a bond equals its coupon rate, the bond will sell at its par value. When interest rates rise, bond prices on outstanding issues fall. When interest rates fall, bond prices on outstanding issues rise.

#### What is the probability that the project will be acceptable

What is the probability that this project will be acceptable? What is the probability that this project will have an NPV in excess of \$1 million?

#### What will your annual loan payment be

Annuity Values Betty's Bank offers you a \$7,000, six-year term loan at 10 percent annual interest. What will your annual loan payment be?

#### Markets efficiency is affected by the number of transactions

Do you think a market's efficiency is affected by the number of transactions that take place, the amount of time it takes to complete the transaction and the number of buyers and sellers present? How do these questions relate to the Primary and Secon..