Question

Your project fuel expenses are 500$ for years 1, 2 and 3. What it is the...

Your project fuel expenses are 500$ for years 1, 2 and 3. What it is the present worth P of these expenses if the expected general inflation rate is 3% during that period? i = 12%

1) Convert actual payments to constant payments

2) Redraw cash-flow diagram

3) Calculate i’ : 0.12 = i’ + 0.03 + 0.03i’  get i’

4) Calculate P using P/A, i’, n

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
One of your colleagues has given you constant dollar information about the anticipated savings cash flow...
One of your colleagues has given you constant dollar information about the anticipated savings cash flow from a modernization project that your team is evaluating. This project will last 3 years. Your colleague believes the savings at the end of the first year will be $30,000 and it will increase by $1000 each of the following years 2 and 3. Your company requires economic evaluations be calculated using actual dollars for all cash flows. You know that the general inflation...
year CPI 0 110 1 130 2 145 3 170 4 150 5 110 The annual...
year CPI 0 110 1 130 2 145 3 170 4 150 5 110 The annual fuel costs required to operate a small solid-waste treatment plant are projected to be $3 million without considering any future inflation. The best estimates indicate that the annual market interest rate (i) will be 8%. You can find the general inflation rate for each year based on the below table which presents the CPI values over the years (year 0 to year 5). If...
An arithmetic cash flow gradient series equals $400 in year 1, $500 in year 2, and...
An arithmetic cash flow gradient series equals $400 in year 1, $500 in year 2, and amounts increasing by $100 per year through year 10. At i = 9% per year, determine the present worth of the cash flow series in year 0. The present worth of the cash flow series in year 0 is $ .?
PP2: You've bought an inflation-adjusted annuity to give you a constant real income during your retirement...
PP2: You've bought an inflation-adjusted annuity to give you a constant real income during your retirement years. The annuity will make 20 annual payments. The first payment of $80,000 will occur one year from now Annual payments will then grow at the rate of inflation, 3%, for 19 more years and then stop. (There are 20 total payments and the last payment is made at the end of year 20.) The interest rate is 8%. What is the present value...
A project for a barge water transportation of raw materials did not yield estimated savings and...
A project for a barge water transportation of raw materials did not yield estimated savings and is being terminated.The market value of the barge is $14,000 (×$1,000). The project had the following cash flows in actual dollars. The company uses a real interest rate i’ = 15% for this product, and inflation is expected to maintain at a 3% average. The company uses MACRS depreciation and has a combined tax rate is 40%. Estimate the after tax cash actual dollar...
A stream of payments over a 5-year period have a present worth of $100,000. Payments in...
A stream of payments over a 5-year period have a present worth of $100,000. Payments in years 1, 4 and 5 are $15,000, $30,000, and $35,000, respectively. The value in years 2 and 3 must be determined. Year 3 is twice year 2. What are the values of year 2 and year 3’s payments? No Interest. PLEASE INCLUDE A CASH FLOW DIAGRAM or I will not rate. Thank you!
1. Z Enterprises is considering a project that has the following cash flow data. what is...
1. Z Enterprises is considering a project that has the following cash flow data. what is the payback period? year 0: -1000 year 1: 500. yr 2: 500 yr 3: 500 2. Z Enterprises is considering a project that has the following cash flow data. what is the payback period? what is the npv? (cost of capital is 11%) year 0: -1000 yr 1: 500 yr 2: 300 yr 3: 800
1. A project pays the investor $5 att1andt2. Fromt3on, the cash flow will increase by5%. For...
1. A project pays the investor $5 att1andt2. Fromt3on, the cash flow will increase by5%. For example, the cash flow att3is $5.25, and the cash flow att4is $5.5125. The rate of return is 15%. Please calculate the project’s present value. 2.  One project has three cash flows: att0, the initial investment cost is $150; att1, the project pays $121; att2, the project needs an extra investment $242; att3, the project pays $665.5. The project has a constant spot rate of return...
13. A stock had returns of 16.70% (1 year ago), 21.60% (2 years ago), X (3...
13. A stock had returns of 16.70% (1 year ago), 21.60% (2 years ago), X (3 years ago), and -31.20% (4 years ago) in each of the past 4 years. Over the past 4 years, the geometric average annual return for the stock was 3.34%. Three years ago, inflation was 4.35% and the risk-free rate was 5.63%. What was the real return for the stock 3 years ago? A. 11.94% (plus or minus 0.03 percentage points) B. 21.89% (plus or...
TABLE 3 Project A Project B Time 0 -11,000 -10,000 Time 1 3,000 4,000 Time 2...
TABLE 3 Project A Project B Time 0 -11,000 -10,000 Time 1 3,000 4,000 Time 2 8,000 3,000 Time 3 3,000 10,000 "Consider the cash flow of the two projects depicted in Table 3. If WiseGuy Inc. uses payback period rule to choose projects, which of the projects (Project A or Project B) will rank highest?" A) Project A B) Project B C) Project A and Project B have the same ranking. D) Cannot calculate a payback period without a...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT