Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A coal mine is considering the addition of a centrifuge to dewater fine coal currently being discarded as waste. The new equipment will cost $2.5

A coal mine is considering the addition of a centrifuge to dewater fine coal currently being discarded as waste. The new equipment will cost $2.5 million and have a useful life of 15 years. The addition is expected to generate $1.1 million for years 1 5 and $2.9 million in years 6-15. The equipment will require a major overhaul in year 8. While this maintenance will not result in any added costs, the centrifuge will not contribute any revenue during year 8. The centrifuge has no salvage value. What is the net present value for this investment? Assume a discount rate of 10%.

Please enter your final answer in millions of dollars. For example, if your answer is $1,350,000, please enter "1.35".

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions

Question

List and briefly explain the fields in an ATM cell.

Answered: 1 week ago

Question

2. Describe how technology can impact intercultural interaction.

Answered: 1 week ago

Question

7. Define cultural space.

Answered: 1 week ago