Question

1. A construction company desires to accumulate GH¢25,000 over
a ten-year period to enable it to replace its ageing excavator. For
an interest rate of 10% per annum compounded semi- annually, what
is the required semi-annual payment?

2. A small construction company is considering the purchase of
a used bulldozer for GH¢61,000. If the company purchases the
bulldozer now, the equivalent future amount in year 4 that the
company is paying for the dozer at 4% per year interest is?

3. The cost of lighting and maintaining an airport control
tower equipment is GH¢90,000 per year. At the interest rate of 10%
per year, what is the present worth of maintaining the equipment
for 10 years?

4. A construction manager wanted to retire in 20 years with
GH¢1.5 million. At 10% per year interest, to reach the
GH¢1.5million goal, starting 1 year from now, the engineer must
annually invest what amount?

5. The amount of money that Zeta Construction Ltd can spend
now improving productivity in lieu of spending GH¢30,000 three
years from now at an interest rate of 12% per year is?

6. A project involves the initial capital investment of
GH¢100,000. It is expected that following this investment the
company will benefit from it by obtaining net cash receipts of
GH¢40,000, GH¢40,000, GH¢30,000 and GH¢20,000 in each of the first
four years of the project’s life respectively. Assuming that these
values are in money terms as opposed to real terms that which take
account of the rate of inflation, what is the NPV for the project
if the firm’s cost of capital is 12%?

7. What is the future value in exactly 4 years’ time of an
investment of GH¢10,000 received today and invested at 4% compound
interest?

8. What would be the future value of the above if the compound
interest rate were 8%?

9. A 3-year project is being evaluated using a discount rate
of 5%. It is expected to have a cash inflow of GH¢60,000 at the end
of its first year, GH¢50,000 at the end of its 2nd year and
GH¢40,000 at the end of its third year. What is the present value
of the future cash flows?

10. The number of years required for an account to accumulate
GH¢650,000 if Josiah deposits GH¢50,000 each year and the account
earns interest at a rate of 6% per year is what?

11. A large face-shovel is bought new for a price of
GH¢23,250. It has an expected life of seven years when it is
expected to have no salvage or resale value. Expenditure on
maintenance, insurance, taxation, fuel and lubricants is expected
to reach GH¢500 by the end of the first year, GH¢700 by the second,
GH¢900 by the end of the third and so on increasing by GH¢200 each
year. What is the Present value of owning this piece of equipment
if interest is at 5%?

12. Owing to a slack in the economy, Omega Construction
Limited temporarily folded up for four years. Throughout this
period, repair and maintenance work was carried out on their
equipment and this cost GH¢15,000 per annum. Calculate the
accumulated sum involved at the end of the four-year period,
assuming a compound interest rate of 8%

Answer #1

A construction management company is examining its cash flow
requirements for the next few years. The company expects to replace
software and in-field computing equipment at various times.
Specifically, the company expects to spend $6,000 1 year from now,
$10,000 3 years from now, and $17,000 each year in years 6 through
10. What is the future worth in year 10 of the planned
expenditures, at an interest rate of 14% per year?

Q1- The cost of maintaining a piece of
construction equipment increases at a constant rate of AED 80 per
month over its 16 year life. This year’s cost (end of year 1) is
expected to be AED 7500. Determine
the cost at the end of year 13
the Present Worth of the maintenance costs at an interest rate
of 9%.

Suppose you own a small company that is contemplating
construction of a suburban office block. The cost of buying the
land and constructing the building is $700,000. Your company has
cash in the bank to finance construction. Your real estate adviser
suggests that you rent out the building for two years at $30,000 a
year and predicts that at the end of that time you will be able to
sell the building for $840,000.
Thus there are now two future...

1. A company desires to accumulate $150,000 in four years to
expand its manufacturing facility. If the company can earn 9%, what
equal amounts must it deposit annually?
a. $32,805 /year
b. $33,879/year
c. $35,879/year
d. $37,999/year
2. What is the present worth of $4,500 at the end of each year
for 12 years at 9.5% compounded annually?
a. $21,425.99
b. $31,427.28
c. $35,968.09
d. $37,798.99

Triad Corporation has
established a joint venture with Tobacco Road Construction, Inc.,
to build a toll road in North Carolina. The initial investment in
paving equipment is $141 million. The equipment will be fully
depreciated using the straight-line method over its economic life
of five years. Earnings before interest, taxes, and depreciation
collected from the toll road are projected to be $20.1 million per
annum for 20 years starting from the end of the first year. The
corporate tax rate...

Triad Corporation has established a joint venture with Tobacco
Road Construction, Inc., to build a toll road in North Carolina.
The initial investment in paving equipment is $80.1 million. The
equipment will be fully depreciated using the straight-line method
over its economic life of five years. Earnings before interest,
taxes, and depreciation collected from the toll road are projected
to be $12.2 million per annum for 20 years starting from the end of
the first year. The corporate tax rate...

Question 1 a
Addis company limited recorded GH¢1,000,000 this year. How much
sales will the company record in 11 years if sales is expected to
grow at 3% quarterly. *
Question 1 b
You have the option to buy an annuity that pays GH¢7,500 at the
end of each year for 8 years. You are optimistic that you can earn
9% on your invstment. What is the most you should pay for this
investment? *

Jones Excavation Company is planning an investment of $122,300
for a bulldozer. The bulldozer is expected to operate for 1,000
hours per year for six years. Customers will be charged $110 per
hour for bulldozer work. The bulldozer operator costs $30 per hour
in wages and benefits. The bulldozer is expected to require annual
maintenance costing $10,000. The bulldozer uses fuel that is
expected to cost $39 per hour of bulldozer operation. Present Value
of an Annuity of $1 at...

A company buys a machine for $25,000. The annual cost of
maintaining the machine is $500 per year for the first 5 years (End
of Year 1 thru End of Year 5) and then it increases to $750 for the
next 5 years (Year 6 thru Year 10). Consider all cash flows to be
end of year cash flows. For an interest rate of 8% per year
compounded yearly, find the annual maintenance cost of the machine
and the present...

E & T Excavation Company is planning an investment of
$177,100 for a bulldozer. The bulldozer is expected to operate for
3,000 hours per year for 10 years. Customers will be charged $110
per hour for bulldozer work. The bulldozer operator costs $38 per
hour in wages and benefits. The bulldozer is expected to require
annual maintenance costing $30,000. The bulldozer uses fuel that is
expected to cost $50 per hour of bulldozer operation.
Present Value of an Annuity of...

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