Question
A company is considering a project which requires $2.5 million in capital investment. The project can bring in an annual revenue of $750k/year next 16
A company is considering a project which requires $2.5 million in capital investment. The project can bring in an annual revenue of $750k/year next 16 years. The annual operation cost (e.g. labor and supplies) is $105k/year. Starting from year 11, the equipment will need major maintenance and this cost starts at $98k/year and increase by $98k each year until the end of the project life time (16 years). The equipment has a salvage value of $375k at the end of the project. Calculate the projects net future value at year 16 to find out whether its worth investing. The interest rate is 6%.
Please only fill in the number of your calculated result in the blank, e.g., if the result is $100k, fill in 100; also round to the nearest integer."
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