A firm that purchases electricity from the local utility for
$350,000 per year is considering installing a steam generator at a
cost of $280,000. The cost of operating this generator would be
$230,000 per year, and the generator will last for five years. If
the firm buys the generator, it does not need to purchase any
electricity from the local utility. The cost of capital is
13%.
For the local utility option, consider five years of electricity
purchases. For the generator option, assume immediate installation,
with purchase and operating costs in the current year and operating
costs continuing for the next four years. Assume payments under
both options at the start of each year (i.e., immediate, one year
from now,..., four years from now).
What is the net present value of the more attractive
choice?
Please round your answer to the nearest dollar. Report the NPV of
cost as a negative number.
A firm that purchases electricity from the local utility for $350,000 per year is considering installing...
A firm that purchases electricity from the local utility is considering installing a steam generator. A large generator costs $280,000 whereas a small generator costs $210,000. The cost of operating the generator would be $100,000 per year for the large and $125,000 for the small. Either generator will last for five years. The cost of capital is 9%. For each generator option, assume immediate installation, with purchase and operating costs in the current year and operating costs continuing for the...
A firm that purchases electricity from the local utility is considering installing a steam generator. A large generator costs $290,000 whereas a small generator costs $170,000. The cost of operating the generator would be $300,000 per year for the large and $320,000 for the small. Either generator will last for five years. The cost of capital is 11%. For each generator option, assume immediate installation, with purchase and operating costs in the current year and operating costs continuing for the...
Zephyr Farming Pty Ltd is considering the purchase of a wind turbine generator in order to generate electricity and to reduce the electricity costs for their offices, which are located in Toowoomba. Currently the business uses 60,000 kilowatt hours (kWh) per quarter (3 months) at an average cost of $0.30 per kwh, supplied by the local coal fired power station. The current required rate of return used to evaluate projects is 6%, with a required payback period of 3 years....
Zephyr Farming Pty Ltd is considering the purchase of a wind turbine generator in order to generate electricity and to reduce the electricity costs for their offices, which are located in Toowoomba. Currently the business uses 60,000 kilowatt hours (kWh) per quarter (3 months) at an average cost of $0.30 per kwh, supplied by the local coal fired power station. The current required rate of return used to evaluate projects is 6%, with a required payback period of 3 years....
Zephyr Farming Pty Ltd is considering the purchase of a wind turbine generator in order to generate electricity and to reduce the electricity costs for their offices, which are located in Toowoomba. Currently the business uses 60,000 kilowatt hours (kWh) per quarter (3 months) at an average cost of $0.30 per kwh, supplied by the local coal fired power station. The current required rate of return used to evaluate projects is 6%, with a required payback period of 3 years....
Zephyr Farming Pty Ltd is considering the purchase of a wind turbine generator in order to generate electricity and to reduce the electricity costs for their offices, which are located in Toowoomba. Currently the business uses 60,000 kilowatt hours (kWh) per quarter (3 months) at an average cost of $0.30 per kwh, supplied by the local coal fired power station. The current required rate of return used to evaluate projects is 6%, with a required payback period of 3 years....
Zephyr Farming Pty Ltd is considering the purchase of a wind turbine generator in order to generate electricity and to reduce the electricity costs for their offices, which are located in Toowoomba. Currently the business uses 60,000 kilowatt hours (kWh) per quarter (3 months) at an average cost of $0.30 per kwh, supplied by the local coal fired power station. The current required rate of return used to evaluate projects is 6%, with a required payback period of 3 years....
Zephyr Farming Pty Ltd is considering the purchase of a wind turbine generator in order to generate electricity and to reduce the electricity costs for their offices, which are located in Toowoomba. Currently the business uses 60,000 kilowatt hours (kWh) per quarter (3 months) at an average cost of $0.30 per kwh, supplied by the local coal fired power station. The current required rate of return used to evaluate projects is 6%, with a required payback period of 3 years....
EnergiCo Electricit EnergiCo Electricity is a very small town electricity provider This year they will earn $1,000,000 in revenue If they do not add to their plant, their revenue will increase by 5% a year They have the opportunity to purchase 1 new turbine electrical generator They have to choose 1 from, 1)Turbine Alpha or 2)Turbine Beta Turbine Alpha costs $250,000 and Turbine Beta costs $500,000 Turbine Alpha's annual operating cost is 8% of its purchase price Turbine Beta's annual...
solve it in spreadsheet 1 Leonard, a company that manufactures explosion- proof motors, is considering two alternatives for ex- panding its international export capacity. Option 1 requires equipment purchases of $900,000 now and $560,000 two years from now, with annual M&O costs of $79,000 in years 1 through 10. Option 2 involves subcontracting some of the production at costs of $280,000 per year beginning now through the end of year 10. Neither option will have a sig- nificant salvage value....