Use gradient method for calculating present value of costs

Assignment Help Financial Management
Reference no: EM131915033

A cooling, heating, and power (CHP) system was placed into operation for Southeast Regional Hospital with 360 beds. The CHP system was part of a new 20,000 sq. ft. central utility plant that provided the 800,000 sq. ft. health-care facility with cooling, heating, and power. By centralizing all of the utilities in one location, the hospital accrued significant energy savings, as well as improved maintenance efficiency. The financial facts related to the project are summarized as follows:

Installed cost: $1 million

Annual energy cost savings: $971,000

Annual O&M costs: $147,000

Project service life: 14 years

Salvage value: $240,000

At an interest rate of 7%, what is the net savings per dollar invested? Use gradient method for calculating the present value of costs.

Reference no: EM131915033

Questions Cloud

Starbucks own forecast suggests that spot rate : Starbucks’s own forecast suggests that the spot rate 9 months from now is most likely CHF 1.55 / USD.
Reduce the exchange rate risk arising from the sale : Plains States is considering several hedging alternatives to reduce the exchange rate risk arising from the sale.
Define the term average collection period : Define the term average collection period (ACP). What role do metrics play in revenue cycle management?
Signed contract to sell agricultural equipment : Plains States Manufacturing has just signed a contract to sell agricultural equipment to Boschin, a German firm, for EUR 1,250,000.
Use gradient method for calculating present value of costs : At an interest rate of 7%, what is the net savings per dollar invested? Use gradient method for calculating the present value of costs.
Assume the margin is expressed as markup based on cost : Assume the margin is expressed as a markup based on cost. Compute your answer to the nearest penny.
What is market-to-book ratio-dividends per share : What are earnings per share? What are dividends per share? what is the market-to-book ratio?
Calculate the npv and irr based on weighted average cost : Calculate the NPV and IRR based on weighted average cost of capital method,
Foreign exchange exposure using the forward market : What is the net spread earned for six months on this investment if the bank covers its foreign exchange exposure using the forward market?

Reviews

Write a Review

Financial Management Questions & Answers

  General journal entries in financial accounting

Need help with general journal entries in financial accounting? Accounting period July 1 to the 31, 2013. Paid $3,000 for six month rent. Purchased ne equipment that cost $40,000 by signing a 3 year, 6% note payable. The note and interest will be pai..

  What is the break-even quantity

What is the NPV of this alternative scheme? What is the break-even quantity? Calculate DOL based on the alternative scheme used in part a.

  Determine the current value of the bond

Determine the current value of the bond if present market conditions justify a 14 percent required rate of return.

  What is the current share price

If the required return on this stock is 13 percent, what is the current share price?

  Mutual fund that tracks the broad market index

A year ago today, you invested $30,000 in a mutual fund that tracks the broad market index. How many additional shares did you purchase with your distributions?

  What is the annual yield to maturity

Evans Emergency Response bonds have 4 years to maturity. If the price of the bond is $1,084.58, what is the annual yield to maturity?

  What is after-tax cost of debt and what is cost of equity

Another company is in the process of determining its WACC. What is the after-tax cost of debt? What is the cost of equity?

  Considering new three-year expansion project

Mercy Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.85 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life.

  How much will you pay for company stock today

Caan Corporation will pay a $3.26 per share dividend next year. The company pledges to increase its dividend by 6.5 percent per year indefinitely. If you require a return of 15 percent on your investment, how much will you pay for the company’s stock..

  Calculate the present value of this investment

1. Cash flows from a new factory are expected to be $3,000,000 per year, every year for the next ten (10) years. If investor's use 6.25% as the discount rate, calculate the present value of this investment.

  Equipment through some form of debt financing

Turley Corp. would like to raise $1,000,000 on January 1, 2017 to buy an equipment through some form of debt financing.

  Two divisions that have different risk profiles

Your company has two divisions that have different risk profiles. Division A is less riskier than Division B. Since its less riskier, Division A's beta is 0.8 while division B has a beta of 1.2. Overall the firm’s beta is 1. If the risk free rate is ..

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