What is the present value dollars for all cashflows

Assignment Help Business Economics

Reference no: EM131001050

A manufacturing company invests $100,000 in a new piece of equipment. Operating expenses for this new piece of equipment is estimated to be $4,000 starting EOY1 and increasing by $200 per year at the EOY2 and for the next 9 additional years. Additional revenues after placing this piece of equipment in-service are projected to be $20,000 the first year (EOY01) and remaining constant for 4 additional years. After that, additional revenue is expected to increase to $22,000 at EOY6 and increase at the rate of $100 per year from EOY7 through EOY10. At the end of 10 years the piece of equipment will be sold for$10,000. The nominal rate of interest for all years is12%.

a. Draw a cash flow diagram from the company's perspective.

b. What is the present value dollars for all cashflows? (Move all dollars to time=O)

c. What is the uniform series of cash flows for years 1through 10 that is equivalent to all thecash flows over the ten year period?

Reference no: EM131001050

Questions Cloud

Why are multiple role relationships potentially problematic : Why are multiple role relationships potentially problematic? How can multiple role relationships be either avoided or handled professionally

Using labor market graph with appropriately labelled x-axis : Suppose that in the United States corn production uses land and labor, while beer production uses capital and labor. Labor is mobile between the corn and beer industries, while land is specific to the corn industry and capital is specific to the beer..

The dealer is offering two financing programs : You are purchasing a new car for a price of $38,000. The dealer is offering two financing programs. Program 1 will allow you to take possession of your new car and defer your first payment for 6 months. Interest accrues monthly on your purchase durin..

What is the present value dollars for all cashflows : A manufacturing company invests $100,000 in a new piece of equipment. Operating expenses for this new piece of equipment is estimated to be $4,000 starting EOY1 and increasing by $200 per year at the EOY2 and for the next 9 additional years. What is ..

Which shipments should be included in kelly''s december 31 : Which shipments should be included in Kelly's December 31 inventory?

Discuss socio-emotional development : Explain physical development, special considerations, issues, variability and effects on life planning. Discuss cognitive development and Discuss socio-emotional development

Demand in megawatts that will maximize the total revenue : An electric utility uses natural gas as fuel for a large multi-unit power plant. With all units in-service, for a given hour the plant's fixed cost is $120,000 and its variable cost is $50 per megawatt demanded. What is the hourly demand in megawatts..

Account for widespread suspicion : Account for widespread suspicion—especially on the political left, but it can and definitely used to show up on the political right as well—that praise of the market system by economists is greatly overblown?

User Account

All Pages