Prepare a cashflow to forecast and use investment appraisal techniques to calculate Net Present Value (NPV), Return on Capital (ROC) and Payback Period (PB) for the BioMet face pay project.Do the project should go ahead and why? Initial project set-up costs are estimated to be SEK15m (year 0 - 2023).Further estimated operating costs and projected revenues are as follows:Operating costs - Years 1-5 (2024-2028)All figures are in millions of SEK. Further costs are presented in the table below. No inflationaryadjustmentshavebeenmadeinthetable.YearY1Y2Y3Y5Operational costs6666Maintenance costs4444Tech update costs3333Important points to note (after year 1):• Operational costs are estimated to increase by 3.5% per year• Maintenance costs are estimated to increase by 2.8% per year• Tech update costs are estimated to increase by 2% per yearRevenue - revenue projections have been estimated as are follows:Y1Y2Y3Y4Y5YearRevenue (merchantfees)820222530The discount rate used by BioMet is 4.5% per annum.Task1. Prepare a cashflow forecast and use investment appraisal techniques to calculate NetPresent Value (NPV), Return on Capital (ROC) and Payback Period (PB) for the BioMet facepay project.2. Show your workings in SEKm over the 6-year period (2023-2028)3. Comment on the financial implications of the results and indicate if you feel the projectshould go ahead and why.Y4643 Initial project set-up costs are estimated to be SEK15m (year 0 - 2023).Further estimated operating costs and projected revenues are as follows:Operating costs - Years 1-5 (2024-2028)All figures are in millions of SEK. Further costs are presented in the table below. No inflationaryadjustmentshavebeenmadeinthetable.YearY1Y2Y3Y5Operational costs6666Maintenance costs4444Tech update costs3333Important points to note (after year 1):• Operational costs are estimated to increase by 3.5% per year• Maintenance costs are estimated to increase by 2.8% per year• Tech update costs are estimated to increase by 2% per yearRevenue - revenue projections have been estimated as are follows:Y1Y2Y3Y4Y5YearRevenue (merchantfees)820222530The discount rate used by BioMet is 4.5% per annum.Task1. Prepare a cashflow forecast and use investment appraisal techniques to calculate NetPresent Value (NPV), Return on Capital (ROC) and Payback Period (PB) for the BioMet facepay project.2. Show your workings in SEKm over the 6-year period (2023-2028)3. Comment on the financial implications of the results and indicate if you feel the projectshould go ahead and why.Y4643

Taking into consideration the increase in costs at their respective rates we get - YEAR OC…

Initial project set-up costs are estimated to be SEK15m (year 0 - 2023). Further estimated operating costs and projected revenues are as follows: Operating costs - Years 1-5 (2024-2028) All figures are in millions of SEK. Further costs are presented in the table below. No inflationary

Initial project set-up costs are estimated to be SEK15m (year 0 - 2023). Further estimated operating costs and projected revenues are as follows: Operating costs - Years 1-5 (2024-2028) All figures are in millions of SEK. Further costs are presented in the table below. No inflationary

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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aa.2 A new treatment facility will cost $25,000,000. It will operate for 25 years, and an annual cost of $1,000,000. After 25 years, the facility will be sold for $5,000,000. All estimates are in constant 2023 dollars. The MARR is 5%, and inflation is assumed to be 2.5%. a) Calculate i’ b) Use constant dollars to determine the present worth of costs (PWC) after inflation.
8. Five years ago, an industrial engineer deposited $10,000 into an account and left it undisturbed until now. The account is now worth $25,000. a. What was the overall ROR during the 5 years? b. If the inflation over that period was 4% per year, what was the real ROR? C What is the buying power of the $25.000 now.compared to the buying power
Using 1913 as the base year with a value of 100,the ENR construction cost index (CCI) for October2005 was 7562.50. For October 2006, the CCIvalue was 7882.53. (a) What was the inflation ratefor construction for that one-year period? (b) Theindex value for January 2007 was 7879.58. Whatwas the inflation rate over the period October2006 and January 2007?
Compare the alternatives below on the basis of their capitalized costs with adjustments made for inflation. Use i=9% per year and f= 2.6% per year. Alternative X Y -17,500,000 -25,000 105,000 -12,000,000 -10,000 82,000 10 First cost, $ AOC, $ per year Salvage value, $ Life, years 00 The capitalized cost for alternative X is $-17711255.7039 O The capitalized cost for alternative Y is $ Select alternative
Compare the alternatives below on the basis of their capitalized costs with adjustments made for inflation. Use /=13% per year and f= 4.7% per year. Alternative First cost, $ AOC, $ per year Salvage value, $ Life, years X -16,500,000 -25,000 105,000 00 The capitalized cost for alternative X is $ -1669230769 The capitalized cost for alternative Y is $ Select alternative X Y -15,000,000 -10,000 82,000 10
Compare the alternatives below on the basis of their capitalized costs with adjustments made for inflation. Use i=14% per year and f%= 3.2% рer year. Alternative Y First cost, $ -16,500,000 -13,500,000 AOC, $ per year -25,000 -10,000 Salvage value, $ Life, years 105,000 82,000 10 00 The capitalized cost for alternative X is $ The capitalized cost for alternative Y is $ Select alternative Y
Your department is budgeting miscellaneous expenses for the next 5 years. Your best guess at the annual inflationrate is 3.9 percent, and the combined MARR is 15 percent. Expenses currently run $14,500 per year. Assume thatexpenses are end-of-year payments.a. Determine the then-current dollar amounts for years 1, 2, 3, 4, and 5.b. Determine the constant dollar amount for years 1, 2, 3, 4, and 5.Year 2005 2006 2007 2008 2009Rate % 18.853% 15.995% 10.665% "16.220% "12.723%574 CHAPTER 12 / INFLATION EFFECTSc. Determine the PW of the then-current dollar amounts.d. Determine the PW of the constant dollar amounts.
You are trying to estimate the real interest rate for the mining industry products and proceed as follows. You consider buying coal and gold in equal proportion, spending $1000 on coal, and another $1000 on gold in today's dollars. In 4 years from now, the selling values in actual dollars are predicted to be $1,270 (coal) and $1,210 (gold). Inflation (for coal) is 1.1% per year, for the next 4 years. For gold, the gold price index is predicted to rise in the next 4 years from the current 417 points to 431 points. Compute the estimated real interest rate, as a number, with 0.001 precision. Hint: Calculate real interest rate for the cash flow: 1) invest now $1000+$1000; 2) sell in 4 years coal and gold and obtain appropriate cash flow.
Introduction to Decisions Under Certainty TOPIC How much will a car cost in 5 years if its current cost is $20,000 and its price willincrease by 6% per year? No interest rate, only inflation, is involved.Given: P = $20,000 n = 5 years f = 6%
Your department is budgeting miscellaneous expenses for the next 5 years. Your best guess at the annual inflation rate is 3.9% and the combined MARR is 15%. Expenses currently run $14,500 per year. Assume that expenses are end-of-year payments. Solve, a. Determine the then-current dollar amounts for years 1, 2, 3, 4, and 5. b. Determine the constant-dollar amount for years 1, 2, 3, 4, and 5. c. Determine the PW of the then-current-dollar amounts. d. Determine the PW of the constant dollar amounts.
Inflation Rate (n) 15.0% 14.0% 13.0% 12.0% 11.0% 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% U 1,000 2,000 3,000 4.000 5,000 real GDP will equal 6,000 7,000 8,000 9,000 LRAS Real GDP (Y) 10,000 3 11,000 12,000 13,000 14,000 15,000 16,000 17,000 Moreover, the cyclical unemployment will equal AD SRAS Forget about the previous question. Short Run and Consider the graph above. It is also in the files folder under the name the Long Run. The graph pertains to a hypothetical country. The central bank in this country (also called the Fed) follows an inflation targeting policy. The current target inflation rate in 8 percent. The natural rate of unemployment is 5 percent and Okun's alpha is 8. units, equal to potential. 18,000 A pandemic comes and many people decide to retire out of fear of infection. This causes the labor force to decrease. As a result, LRAS shifts to the left by 2,000 units. In the short run, many people might confuse this with a recession. However, in the short…
3 eBook Hint Print References Problem 14.030: Compare alternatives by calculating their capitalized cost Compare the alternatives below on the basis of their capitalized costs with adjustments made for inflation. Use / -9% per year and f= 3.5% per year. Alternative First cost, $ AOC. $ per year Salvage value, $ Life, years X -15,500,000 -25,000 105,000 00 The capitalized cost for alternative X is $[ The capitalized cost for alternative Y is $[ Select alternative X Y -12,500,000 -10,000 82,000 10