A project your firm is considering for implementation has these estimated costs and revenues: an investment cost of $50,000; maintenance costs that start at $5,000 at the end of year (EOY) 1 and increase by $500 each year until year 10 ; savings of $20,000 per year (EOY 1–10); and finally a resale value of $35,000 at the EOY 10. If the project has a 10-year life and the firm’s MARR is 10% per year, a) what is the present worth of the project? PW = $ b) What is the Future Worth of this project? FW = $ c) What is IRR ? IRR = % d) Is it a sound investment opportunity? YES or NO e) Determine the Discounted Payback years?
A project your firm is considering for implementation has these estimated costs and revenues: an investment cost of $50,000; maintenance costs that start at $5,000 at the end of year (EOY) 1 and increase by $500 each year until year 10 ; savings of $20,000 per year (EOY 1–10); and finally a resale value of $35,000 at the EOY 10. If the project has a 10-year life and the firm’s MARR is 10% per year, a) what is the present worth of the project? PW = $ b) What is the Future Worth of this project? FW = $ c) What is IRR ? IRR = % d) Is it a sound investment opportunity? YES or NO e) Determine the Discounted Payback years?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A project your firm is considering for implementation has these estimated costs and revenues: an investment cost of $50,000; maintenance costs that start at $5,000 at the end of year (EOY) 1 and increase by $500 each year until year 10 ; savings of $20,000 per year (EOY 1–10); and finally a resale value of $35,000 at the EOY 10. If the project has a 10-year life and the firm’s MARR is 10% per year,
a) what is the present worth of the project? PW = $
b) What is the Future Worth of this project? FW = $
c) What is IRR ? IRR = %
d) Is it a sound investment opportunity? YES or NO
e) Determine the Discounted Payback years?
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