Present worth Calculation
Note that changing the interest period \(t\) does not alter the compounding period, which is I month in this illustration. Therefore, \(r=9 \%\) per year, compounded monthly, and \(r=4.5 \%\) per 6 mönths, compounded monthly, are two expression of the same interest rate.
1. An irrigation system will have a first cost of \(\$ 4,000,000\), an annual maintenance cost of \(\$ 35,000\) and minor reconstruction costs of \(\$ 150,000\) every five years. At an interest rate of \(8 \%\) per year, the capitalized cost of the dam is nearest to:
Homework Answers
ASSIGNMENT 1. Determine the capitalized cost of an equipment costing P2M with and annual maintenance of...
ASSIGNMENT 1. Determine the capitalized cost of an equipment costing P2M with and annual maintenance of P200,000.00 if money is worth 20% per annum. 2. A dam will have a first cost of $5,000,000 an annual maintenance cost of $25,000 and minor reconstruction costs of $100,000 every five years. At an interest rate of 8% per year, the capitalized cost of the dam is? 3. A P100,000, 6% bond, pays dividend semi-annually and will be redeemed at 110% on July...
The US Army Corps of Engineers is considering a safety modification to the Keystone Dam. The...
The US Army Corps of Engineers is considering a safety modification to the Keystone Dam. The modification will have a first cost of $5,000,000 with annual maintenance costs of $25,000 and minor reconstruction costs of $100,000 every five years. If the Corps uses an interest rate of 8%/yr/yr, what is the capitalized cost of the dam?
Problem 3 - (11 pts) The US Army Corps of Engineers is considering a safety modification to the Keystone Dam. The modifi...
Problem 3 - (11 pts) The US Army Corps of Engineers is considering a safety modification to the Keystone Dam. The modification will have a first cost of $5,000,000 with annual maintenance costs of $25,000 and minor reconstruction costs of $100,000 every five years. If the Corps uses an interest rate of 8%/yr/yr, what is the capitalized cost of the dam?
Capitalized cost is defined as the present worth of infinite expenditures to construct, maintain and renew all alte...
Capitalized cost is defined as the present worth of infinite expenditures to construct, maintain and renew all alternatives. This method is usually used in comparisons involving very long term considerations. On a capitalized cost basis, the income or expenditures are calculated as though they continue in perpetuity or, in other words, forever. The capitalized basis of evaluation consists of finding a single sum in the present whose return at a given rate of interest will be equivalent to expenditures repeated...
1) For Nominal Interest Rate expression select one of the following: A. Interest period≥ Compounding period...
1) For Nominal Interest Rate expression select one of the following: A. Interest period≥ Compounding period B. Interest period = Compounding period C. Interest period < Compounding period D. Compounding period≥ Interest period. 2)If the nominal interest rate is 10% per year compounded weekly, then what is “z% per half year compounded weekly”? A. 10% B. 2% C. 5% D. 6%
For the following investment, find the total number of compounding periods (n) and the interest rate...
For the following investment, find the total number of compounding periods (n) and the interest rate per period (i) that you would substitute into the future value or present value formula . (Do not round.) Time Annual Rate Compounded Rate per period (in decimal form) Compounding periods 8 years 4.5% Monthly
Street lighting fixtures and their sodium vapor bulbs for a two-block area of a large city...
Street lighting fixtures and their sodium vapor bulbs for a two-block area of a large city need to be installed at a first cost investment cost) of $140,000. Annual maintenance expenses are expected to be $6,000 for the first 25 years and $10,000 for each year thereafter. The lighting will be needed for an indefinitely long period of time. With an interest rate of 8% per year, what is the capitalized cost of this project? Click the icon to view...
How much will $20,000 invested today at 3 percent interest be worth in 5 years if...
How much will $20,000 invested today at 3 percent interest be worth in 5 years if it is compounded annually? How much will it be worth in 5 years if compounded monthly? Value Today- Rate- Number of years- Months per year- Compounding periods- Rate per quarter- Annual FV- Monthly FV-
Calculate the present worth of the Alternative "A". Assume the interest rate is 2% per year,...
Calculate the present worth of the Alternative "A". Assume the interest rate is 2% per year, compounded annually. Alternative A Initial cost $1,000,000 Annual maintenance cost $50,000 Overhaul cost every 4 years $200,000 Salvage value $400,000 Useful life 40 years
Asked you to prepare a Present worth calculation adjusted for inflation for the next 3 dicts infl...
asked you to prepare a Present worth calculation adjusted for inflation for the next 3 dicts inflation to be 4.5% per year and the real interest rate to be 12% per year. The below table is what he wants you to fill out. What would be the cost in future dollars, future 6. Your CEO years. He pre t in constant value dollars and the present worth at the real interest rate after 3 years cos (SHOW ALL CALCULATION)? (10pts)...
Capitalized cost is defined as the present worth of infinite expenditures to construct, maintain and renew all alternatives. This method is usually used in comparisons involving very long term considerations. On a capitalized cost basis, the income or expenditures are calculated as though they continue in perpetuity or, in other words, forever. The capitalized basis of evaluation consists of finding a single sum in the present whose return at a given rate of interest will be equivalent to expenditures repeated...
Street lighting fixtures and their sodium vapor bulbs for a two-block area of a large city need to be installed at a first cost investment cost) of $140,000. Annual maintenance expenses are expected to be $6,000 for the first 25 years and $10,000 for each year thereafter. The lighting will be needed for an indefinitely long period of time. With an interest rate of 8% per year, what is the capitalized cost of this project? Click the icon to view...
asked you to prepare a Present worth calculation adjusted for inflation for the next 3 dicts inflation to be 4.5% per year and the real interest rate to be 12% per year. The below table is what he wants you to fill out. What would be the cost in future dollars, future 6. Your CEO years. He pre t in constant value dollars and the present worth at the real interest rate after 3 years cos (SHOW ALL CALCULATION)? (10pts)...
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