U.S. Steel is considering a plant expansion to produce austenitic, precipitation
ID: 1136558 • Letter: U
Question
U.S. Steel is considering a plant expansion to produce austenitic, precipitation hardened, duplex, and martensitic stainless steel round bars that is expected to cost $15 million now and another $10 million 1 year from now. If total operating costs will be $1.8 million per year starting 1 year from now, and the estimated salvage value of the plant is virtually zero, how much must the company make annually in years 1 through 10 to recover its investment plus a return of 24% per year? company must make $ million annually in years 1 through 10 to recover its investment plus a return of 24% per year.Explanation / Answer
Initial invesment = $15 million
Investment after one year = $10 million after one year
Return on investment = 24%
Annual earnings = $16.654 million
Future Value = $199.54 million
Total Deposits = $33 million
Interest Earned = $166.54 million
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