HVAC Economics 1. In five years, the value of an investment of $1000 increases to $1200....
HVAC Economics
1. In five years, the value of an investment of $1000 increases to $1200. What is the average annual interest rate over this period?
2. If the rate of general inflation is 3% and the nominal discount rate is 6%, what is the real discount rate?
3. According to 2017 US government projections, if the price of electricity for a commercial property in Oklahoma is $0.10/kWh in constant dollars in 2016, what will be its cost in constant dollars in 2032?
4. A commercial project with a service date of January 1, 2017 has a first year electric energy cost of $5000. Assuming that approximately the same energy consumption occurs every year, what is the NPV of the first 10 years of electric costs if the project is located in a) Pennsylvania and b) California?
5. Based on 2017 OMB projections, if an industrial facility in Nebraska consumes an amount of fuel oil every year that costs $1,000,000 in 2014, what is the present value of fuel oil cost for 25 years of operation?
6. An all-electric HVAC system in a 50,000 square foot commercial building costs $10 per square foot installed and its energy use is $0.75 per square foot per year. Maintenance cost is estimated at 3% per year of installed cost. For a 25 year investment life, what is the life cycle cost, expressed as NPV, of this project based on US average DOE economic data for a service date of 2017?
7. An alternative to the system in question 6, also using electric power, costs $10.75 per square foot and reduces electric energy use to $0.65 per square foot per year, with the same estimated annual maintenance cost rate. Is this a better investment or a worse investment in economic terms than the base investment in question 6? Base your conclusion on NPV.
8. Comparing the investments in 6 and 7 and treating 6 as the base case, what are the net savings, savings to investment ratio, and adjusted internal rate of return?
9. Again comparing the investments in questions 6 and 7, what are the simple payback and discounted payback of the investment in question 7?
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HVAC Economics
1. In five years, the value of an investment of $1000 increases
to $1200....
A 2 comma 5002,500 square foot house in New Jersey costs $1 comma 8001,800 each winter to heat with its existing oil-b...
A
2 comma 5002,500
square foot house in New Jersey costs
$1 comma 8001,800
each winter to heat with its existing oil-burning furnace. For
an investment of
$5 comma 5005,500,
a natural gas furnace can be installed, and the winter heating
bill is estimated to be
$1 comma 0001,000.
If the homeowner's MARR is
66%
per year, what is the discounted payback period of this
proposed investment? (please show work in excel)
A 2,500 square foot house in New Jersey...
If there are 6500 degree-days in this area, and the price of fuel is $10 per...
If there are 6500 degree-days in this area, and the price of fuel is $10 per million Btu, then find the heating cost per square foot per heating season for the un-insulated floor. (ans: $0.68/ft2) If 6-in fiberglass costs $0.40 per square foot, what will be the payback time (as a result of energy savings) on this installation? (ans: 0.7 seasons)
A 2,500 square foot house in New Jersey costs $2,000 each winter to heat with its...
A 2,500 square foot house in New Jersey costs $2,000 each winter to heat with its existing oil-burning furnace. For an investment of $6,000, a natural gas furnace can be installed, and the winter heating bill is estimated to be $1,200. If the homeowner's MARR is 8% per year, what is the discounted payback period of this proposed investment? Choose the correct answer below. A. The discounted payback period of this proposed investment is 9 years. B. The discounted payback...
Atlantic Manufacturing is considering a new investment project that will last for four years. The delivered...
Atlantic Manufacturing is considering a new investment project that will last for four years. The delivered and installed cost of the machine needed for the project is $23,251 and it will be depreciated according to the three-year MACRS schedule. The project also requires an initial increase in net working capital of $307. Financial projections for sales and costs are in the table below. In addition, since sales are expected to fluctuate, NWC requirements will also fluctuate. The end-of-year NWC requirements...
Atlantic Manufacturing is considering a new investment project that will last for four years. The delivered...
Atlantic Manufacturing is considering a new investment project that will last for four years. The delivered and installed cost of the machine needed for the project is $22,164 and it will be depreciated according to the three-year MACRS schedule. The project also requires an initial increase in net working capital of $303. Financial projections for sales and costs are in the table below. In addition, since sales are expected to fluctuate, NWC requirements will also fluctuate. The end-of-year NWC requirements...
You are considering a new product launch. The project will cost $800,000, have a four-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 200 units per...
You are considering a new product launch. The project will cost $800,000, have a four-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 200 units per year; price per unit will be $18,300, variable cost per unit will be $15,300, and fixed costs will be $630,000 per year. The required return on the project is 12 percent, and the relevant tax rate is 34 percent. a) Based on your experience, you think the...
Do in Excel. Southwest Products Company is considering a project to invest. The initial investment is...
Do in Excel. Southwest Products Company is considering a project to invest. The initial investment is $15 million and the life of the project is 7 years. Its revenue per year is $10 million and cost of goods sold is 50% of revenue. The project will be depreciated by using the 7-year MACRS depreciation rate. The company’s tax rate 35% and cost of capital is 12%. Calculate payback period, discounted payback period, NPV, IRR, PI and MIRR for the project.
A project under consideration costs $400,000, has a five-year life and has no salvage value. Depreciation...
A project under consideration costs $400,000, has a five-year life and has no salvage value. Depreciation is straight-line to zero. The firm has made the following projections related to this project Base Case Upper Lower Bound Bound 2,625 $294 $126 $273,000 Unit Sales Price Per Unit Variable Cost Per Unit Fixed Costs 2,500 $280 $120 $260,000 2,375 $266 $114 $247,000 The required return is 10 percent and the tax rate is 30 percent. No additional investment in net working capital...
Atlantic Tires is considering an investment in a new production facility. For the next five years,...
Atlantic Tires is considering an investment in a new production facility. For the next five years, the company expects to achieve an annual cash flow of $3,500,000 if the project is successful and $1,000,000 if the project is a failure. Projects of this nature are successful 60% of the time. The initial investment required is $9,500,000, and the relevant discount rate is 10%. Assume the production facility will be obsolete five years from now (i) What is the base-case NPV?...
NAML: Trump Inc. is in its annual Capital Budgeting review p investment opportunities and gathered information...
NAML: Trump Inc. is in its annual Capital Budgeting review p investment opportunities and gathered information for each company has decided to use a hurdle rate of 11.50% for all pro want as determined that for any project to be accepted, it must first na ess than 4.00 years and must have a positive NPV based on the huraietan company has decided to ration the amount of capital for new projects at $1,000,000 " review process. The company has searched...
A
2 comma 5002,500
square foot house in New Jersey costs
$1 comma 8001,800
each winter to heat with its existing oil-burning furnace. For
an investment of
$5 comma 5005,500,
a natural gas furnace can be installed, and the winter heating
bill is estimated to be
$1 comma 0001,000.
If the homeowner's MARR is
66%
per year, what is the discounted payback period of this
proposed investment? (please show work in excel)
A 2,500 square foot house in New Jersey...
A 2,500 square foot house in New Jersey costs $2,000 each winter to heat with its existing oil-burning furnace. For an investment of $6,000, a natural gas furnace can be installed, and the winter heating bill is estimated to be $1,200. If the homeowner's MARR is 8% per year, what is the discounted payback period of this proposed investment? Choose the correct answer below. A. The discounted payback period of this proposed investment is 9 years. B. The discounted payback...
Atlantic Manufacturing is considering a new investment project that will last for four years. The delivered and installed cost of the machine needed for the project is $23,251 and it will be depreciated according to the three-year MACRS schedule. The project also requires an initial increase in net working capital of $307. Financial projections for sales and costs are in the table below. In addition, since sales are expected to fluctuate, NWC requirements will also fluctuate. The end-of-year NWC requirements...
A project under consideration costs $400,000, has a five-year life and has no salvage value. Depreciation is straight-line to zero. The firm has made the following projections related to this project Base Case Upper Lower Bound Bound 2,625 $294 $126 $273,000 Unit Sales Price Per Unit Variable Cost Per Unit Fixed Costs 2,500 $280 $120 $260,000 2,375 $266 $114 $247,000 The required return is 10 percent and the tax rate is 30 percent. No additional investment in net working capital...
Atlantic Tires is considering an investment in a new production facility. For the next five years, the company expects to achieve an annual cash flow of $3,500,000 if the project is successful and $1,000,000 if the project is a failure. Projects of this nature are successful 60% of the time. The initial investment required is $9,500,000, and the relevant discount rate is 10%. Assume the production facility will be obsolete five years from now (i) What is the base-case NPV?...
NAML: Trump Inc. is in its annual Capital Budgeting review p investment opportunities and gathered information for each company has decided to use a hurdle rate of 11.50% for all pro want as determined that for any project to be accepted, it must first na ess than 4.00 years and must have a positive NPV based on the huraietan company has decided to ration the amount of capital for new projects at $1,000,000 " review process. The company has searched...
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