4-4 A government monument is expected to last forever. The first cost is $5,000,000. At the end o...

Question

Question

4-4 A government monument is expected to last forever. The first cost is $5,000,000. At the end of year 7 there will be a one

business economics

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

I = 4%

initial cost = 5000000

Annual O&M = 15000

Remodeling every 12 years = 500000

One time modeling at 7 years = 300000

Capitalized cost = -5000000 - 15000/0.04 - 300000*(P/F,4%,7) - [500000*(A/F,4%,12)] / 0.04

= -5000000 - 375000 - 300000*0.759917 - [500000*0.0665521] / 0.04

= -13921987.60

Therefore capitalized cost is 13921988

(A/P,4%,infinite) = i = 0.04

EUAC = 5000000*(A/P,4%,infinite) + 15000 + 300000*(P/F,4%,7)(A/P,4%,infinite) + 500000*(A/F,4%,12)

= 5000000*0.04 + 15000 + 300000*0.759917*0.04 + 500000*0.0665521

= 556879.50

Cash flow

13141516171819202122231 1 2 3 4 5 6 8 9 10 11 5,00,000.00 10,00,000.00 15,00,000.00 20,00,000.00 Remodeling every 12 years On

Annual cost and remodeling every 12 year Cash flow will keep on repeating until an infinite period.

Add a comment

Answer 2

Similar Homework Help Questions

4-4 A government monument is expected to last forever. The first cost is $5,000,000. At the...

4-4 A government monument is expected to last forever. The first cost is $5,000,000. At the end of year 7 there will be a one-time remodeling cost of $300,000. At the end of every 12 years there will be a major remodeling cost of $500,000. Annual Operating& Maintenance Costs will total $15,000 for each year i-4% per year. a. Calculate the capitalized cost. b. Calculate the equivalent uniform annual cost (do not use the calculated capitalized cost in c. Draw...
cost for machine tool are expected to be 1000$ at the end of the first year...

cost for machine tool are expected to be 1000$ at the end of the first year of the machines life and increase 100$/year thereafter. The machine tools expected like is 15 years. The firms MARR is 10%/year. What is the annual worth of the maintenance cost? Draw the cash flow diagram to help solve. HINT End of year one tools are expected to be 1000$, and then increases 100$ thereafter up to 15 years. Show ALL WORK and EQUATIONS, and...
The initial cost of an infrastructure development project which is expected to serve residents of...

The initial cost of an infrastructure development project which is expected to serve residents of a city perpetually is 15,000,000. The annual operating cost is 800,000 for the first 10 years and 900,000 on the succeeding years onwards. The renovation cost at the end of every 15 years is 1,800,000. Find out the capitalized cost of the project when 1-8% per year. (please include the cash flow diagram and use proper capitalized cost formulas with neatness and accuracy) The initial...

5) (17 points) Maintenance costs for a bridge are cyclic with the following costs occurring over...

5) (17 points) Maintenance costs for a bridge are cyclic with the following costs occurring over a 5-year period. MARR is 10% per year compounded annually. EOY 2 3 5 Maintenance S50 million $75 million $75 million $75 million $150 million Cost 1 4 a) (14 points) Compute an equivalent uniform annual cost over a single 5-year maintenance cycle. b) (3 points) It is anticipated that the sequence of costs will repeat every 5 years forever. If so, determine the...
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 city of Mersey is planning to construct a bridge across the Cavendashim river. The first...

The city of Mersey is planning to construct a bridge across the Cavendashim river. The first cost of the bridge will be $6,774,476. Annual maintenance and repairs will be $26,435 for the first 5 years, and then will increase to $44,195 for each of the next 10 years. For the final 5 years, the annual maintenance and repairs will increase again to $53,649 per year. A major overhaul of $497,375 will be performed at the end of year 8. Using...

(Financial Ratios-Investment Analysis) The annual sales for Salco, Inc., were $5,000,000 last year. The firm's end-of-year...

(Financial Ratios-Investment Analysis) The annual sales for Salco, Inc., were $5,000,000 last year. The firm's end-of-year balance sheet appeared as follows: Current assets $500,000 Net fixed assets $1,500,000 $2,000,000 Liabilities $1,000,000 common' equity $1,000,000 $2,000,000 The firm's income statement for the year was as follows: Sales Less: Cost of goods sold Gross profit Less: Operating expenses Operating income Less: Interest expense Earnings before taxes Less: Taxes (40%) Net income $5.000.000 (3,000,000) $2,000,000 (1,500,000) $500,000 (100,000 $400,000 (160.000) $240.000 a. Calculate...
A machine which initially costs $14,000 has operating costs of $800 per year. These operating costs...

A machine which initially costs $14,000 has operating costs of $800 per year. These operating costs include routine maintenance, but additional major overhauls costing $1,600 each are anticipated in years 2, 4, and 6. The machine is sold for its salvage value of $2,400 at the end of year 7. The machine's owners use an interest rate of 8% for their financial analysis. a) Draw the cash flow diagram for this scenario. b) What is the net present value of...
Need cash flow diagram 04) Three mutually exclusive alternative are being considered Initial Cost Benefit at the end of the first Year Uniform Annual Benefits at end of subsequent years Useful Lif...

Need cash flow diagram 04) Three mutually exclusive alternative are being considered Initial Cost Benefit at the end of the first Year Uniform Annual Benefits at end of subsequent years Useful Life in years $500 $200 $100 $400 $200 $125 $300 $200 $100 At the end of its useful life, an alternative is not replaced. If MARR is 10%, which alternatives should be selected? a) Based on the payback period? b) Based on benefit-cost ratio analysis c) Benefit/Costs Analysis using...

4-4 A government monument is expected to last forever. The first cost is $5,000,000. At the end o...

Homework Answers

Add Answer to:
4-4 A government monument is expected to last forever. The first cost is $5,000,000. At the end o...

Post as a guest

Earn Coins