1- Operating costs for a certain process have been increasing uniformly for 5 ye
ID: 1101826 • Letter: 1
Question
1- Operating costs for a certain process have been increasing uniformly for 5 years. If the cost in year 1 was $5000 and it increased by 5% per year through year 5, the present worth of the costs at an interest rate of 5% per year is equal to?
2- An invesment of $100,000 resulted in an income of $25,000 per year for 10 years. The rate of return of the invesment was?
3- What is the payback period of the following investment when i=0%, Initial cost of $1000, Annual cost of $100, Annual income of $300, Salvage value at year 4 of $500?
4- find the closet value of the present worth of the following cash flow. Some are expressed as constant value (CV) dollars, and others are inflated dollars. Assume a real interest rate of 8% year and inflation rate of 6% per year.
Year 1 2 3
Cash flow ($) 3000 6000 8000
Stated as CV INFLATED INFLATED
5- An asset was bought for $100,000. If the asset has an estimated life of 3 years and double declining balance depreciation method is utilized, the book value of the asset at the end of year 2 is?
Explanation / Answer
1) ANswer = $ 23,809.52
A2) 21.4065%
A3) 3.57 years
A4)
A5) $ 44,444,44
Rate of return r 5.00% Formula Case -> A Cash flow PV of Cash flow Year Cash flow PV of cash flow A A/(1+r)^0 0 $ - B B/(1+r)^1 1 -5,000 $ (4,761.90) C C/(1+r)^2 2 -5,250 $ (4,761.90) D D/(1+r)^3 3 -5,513 $ (4,761.90) E E/(1+r)^4 4 -5,788 $ (4,761.90) F F/(1+r)^5 5 -6,078 $ (4,761.90) PW Sum of above PVs of cash flow PW of costs = Answer = $(23,809.5238)Related Questions
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