A Facility Manager is evaluating the installation of Inverter type airconditoning in his facilities (to replace his current non inverter type). The cost of the inverter air conditoning system is P 90,000. Current electricity bill is averaging P 40,000 per month and the Facility Manager estimates that he will save 10% of this cost if he proceeds with the project. He thinks the new acu unit will be good for 5 years. Calculate the a. Average Payback Period b. NPV at a discount rate of 10% c. IRR d. BCR Should the FM proceed with the project?

A Facility Manager is evaluating the installation of Inverter type airconditoning in his facilities (to replace his current non inverter type). The cost of the inverter air conditoning system is P 90,000. Current electricity bill is averaging P 40,000 per month and the Facility Manager estimates that he will save 10% of this cost if he proceeds with the project. He thinks the new acu unit will be good for 5 years. Calculate the a. Average Payback Period b. NPV at a discount rate of 10% c. IRR d. BCR Should the FM proceed with the project?

Name: please answer all parts of the question within 30 minutes. A Facility
Uploaded: 2024-03-20T06:50:59.000Z
Channel: Bartleby
Description: please answer all parts of the question within 30 minutes. A Facility Manager is evaluating the installation of Inverter type airconditoning in his facilities (to replace hiscurrent non inverter type). The cost of the inverter air conditoning system

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 2TP: Austins cell phone manufacturer wants to upgrade their product mix to encompass an exciting new...

See similar textbooks

Similar questions

Caduceus Company is considering the purchase of a new piece of factory equipment that will cost $565,000 and will generate $135,000 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.
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.
The Ham and Egg Restaurant is considering an investment in a new oven that has a cost of $60,000, with annual net cash flows of $9,950 for 8 years. The required rate of return is 6%. Compute the net present value of this investment to determine whether or not you would recommend that Ham and Egg invest in this oven.
A grocery store is considering the purchase of a new refrigeration unit with an Initial Investment of $412,000, and the store expects a return of $100,000 in year one, $72000 in years two and three, $65,000 in years four and five, and $38,000 in year six and beyond, what is the payback period?
If a garden center is considering the purchase of a new tractor with an initial investment cost of $120,000, and the center expects a return of $30,000 in year one, $20,000 in years two and three. $15,000 In years four and five, and $10,000 in year six and beyond, what is the payback period?
Austins cell phone manufacturer wants to upgrade their product mix to encompass an exciting new feature on their cell phone. This would require a new high-tech machine. You are excited about his new project and are recommending the purchase to your board of directors. Here is the information you have compiled in order to complete this recommendation: According to the information, the project will last 10 years and require an initial investment of $800,000, depreciated with straight-line over the life of the project until the final value is zero. The firms tax rate is 30% and the required rate of return is 12%. You believe that the variable cost and sales volume may be as much as 10% higher or lower than the initial estimate. Your boss understands the risks but asks you to explain the alternatives in a brief memo to the board, Write a memo to the Board of Directors objectively weighing out the pros and cons of this project and make your recommendation(s).
A Facility Manager is evaluating the installation of Inverter type airconditoning in his facilities (to replace his current non inverter type). The cost of the inverter air conditoning system is P 90,000. Current electricity bill is averaging P 40,000 per month and the Facility Manager estimates that he will save 10% of this cost if he proceeds with the project. He thinks the new acu unit will be good for 5 years. Calculate the a. Average Payback Period b. NPV at a discount rate of 10% c. IRR d. BCR Should the FM proceed with the project?
Two electric motors are being considered to drive a centrifugal pump. One of the motors must be selected. Each motor is capable of delivering 60 horse power (output) to the pumping operation. It is expected that the motors will be in use 800 hours per year. The following data are available: Solve, a. If electricity costs $0.07 per kilowatt-hour, which motor should be selectedif the MARR is 8% per year? Recall that 1 hp = 0.746 kW. Assume repeatability. b. What is the basic trade-off being made in this problem?
A young engineer is considering to built a 1 unit apartment near a commercial center. Because of the location, the investment can guarantee a 90% occupancy rate. So then, he projects an earning of 20% annually. Other data are the following: Land P10M Building cost 14M Projected Useful life Cost of land after 20 years Cost of Building after 20 years Rent/unit/month 20 years 38M 3.8M 15,000.00 Maintenance/unit/year Property Taxes Building Insurance 2,200.00 1% 0.7% Is this a good investment? Apply the methods of economic studies.
For your new laboratory, you plan to purchase energy efficient freezers. There are two models in the market: Model X costs $100,000, and you need two units of model X for your project. Maintaining costs would be $50,000 and decreasing by $10,000 for each unit per year. Each freezer can be used for four years. At the end of which time, you estimate that the salvage value will be $70,000 for both freezers. Model Y costs $250,000 each. The maintaining cost of this model would be $10,000 per year and it would be decreasing by $5,000 starting in year 4. The salvage value of both model Y at the end of seven years is $60,000. Once again, two units of model Y is required for your project. Since you must complete your project in two years, you estimated that, the model X could be sold for $50,000 each and the model Y for $125,000 each after two years. Find the present worth difference between two models using MARR=10%. Question 3 options: a) Between $35,640 and $37,800…
The expenses included in the fabrication of a wind turbine for a planned Wind Farm is $73,000 annually. A wise Electrical Engineer developed an alternative that by spending $16,000 now to modify the rotor blades and adjust the gear box, the yearly cost will decrease to $58,000 next year and $52,000 at the end of year 2 until 5. If the interest rate is 10% per year, what is the present worth of the cost savings because of the modification and adjustment?
You are investigating the cost of project to renovate the kitchens in a large apartment building, the payments for this work will be $32,500 up front and $13500 a month for 8 months, followed by a completion payment of $31500. To start this project you will need to purchase equipment for $70,000 at the beginning of the project and you expect monthly materials and operating costs to be about $7,500. The Rate of Return is 12%. What is the total PV of the 8 monthly payments of $13500 per month. You should assume that the payments are made at the end months 1 through 8. (So this is a ordinary simple annuity). Round your answer to the nearest penny. Your Answer: Answer