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a)In 300 words describe what the one-year principle is?
b)A company has an asset that has operating and maintenance costs of $5000 per year, increasing by 8% per year. The asset is currently worth $450 000. Can the one year principle be used?
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- Falkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated revenue producing life of 4 years. Falkland has a cost of capital of 8%. The patent is expected to generate the following amounts of annual income and cash flows: A. What is the NPV of the investment? B. What happens if the required rate of return increases?Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $420,000 and will generate $95,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further Instructions on internal rate of return in Excel, see Appendix C..company can buy a machine that is expected to increase the company's net income by $25, 000 each year for the 10-year life of the machine. The company also estimates that for the next 10 years, the money they invest from that continuous stream will earn 6 % compounded continuously. Round all answers to the nearest cent. a. Find the total amount of money produced by the machine over its 10-year life. b. Find the future value of the income stream. c. Find the present value of the income stream. %24
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- A company would like to purchase a machine for $160,000 with a life of 8 years. They estimate a POSITIVE salvage value to be 3% of the initial machine cost (CASH IN FLOW at EOY8). If other operating costs are estimated to be $15,000 per year. The interest rate the company uses to justify their investments is 9% per year compounded yearly. a. What is the capital recovery cost? b. What is the minimum amount of annual revenue ($? per year) that makes this investment an attractive option for the company?A company purchased a small equipment for $70000. Annual maintenance costs are expected to be $1850, but extra income will be $14000 per year. How long will it take for the company to recover its investment at an interest rate of 10% per year? Select one: a. n is between 9 and 10 b. n is between 5 and 6 c. n is between 8 and 9 d. n is between 6 and 7A factory costs $970,000. You reckon that it will produce an inflow after operating costs of $187,000 a year for 15 years. a. If the opportunity cost of capital is 11%, what is the net present value of the factory? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What will the factory be worth at the end of eight years? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
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