Description
- the full question in the attach file
- 2.5 points) Find the present value, P, for the following cash flows.
- (2.5 points) Star Inc. must purchase a small size milling machine. The following is known about the machine and about possible cash flows. The machine is expected to have a useful life of 8 years. The company has a MARR of 7%. Determine the NPW of the machine.
- (2.5 points) The company accountant is uncertain which of three depreciation methods the firm should use for welding equipment that costs $150,000, and has a zero salvage value at the end of a 10-year depreciable life. Compute the depreciation schedule for the welding equipment using the methods listed:
- Straight line
- Double declining balance
- Sum-of-years’ –digits
- (2.5 points) A Petroleum company recently completed construction on a large refinery in Louisiana. The final construction cost was $71,000,000. The refinery covers a total of 260 acres. The Expansion and Acquisition Department at the company is currently working on plans for a new refinery in Texas. The anticipated size is approximately 360 acres. If the power-sizing exponent for this type of facility is .70, what is the estimated cost of construction?
i = 12%
p=.25 | p=.50 | p=.25 | |
First cost | $40,000 | $40,000 | $40,000 |
Annual savings | 2,000 | 5,000 | 8,000 |
Annual costs | 12,000 | 8,000 | 6,000 |
Actual salvage value | 4,000 | 5,000 | 6,500 |
Based on your analysis, which depreciation method is most profitable for the firm?
Unformatted Attachment Preview
Purchase answer to see full attachment