Question
A company is considering a project which requires $3 million capital investment. The project can bring in an annual revenue of $300k for the next
A company is considering a project which requires $3 million capital investment. The project can bring in an annual revenue of $300k for the next 25 years. The annual operation cost (e.g. labor and supplies) is $10k. Starting from year 20, the equipment will need major maintenance and this cost starts at $5k and increase by 5k each year until the end of the project life time (25 years). The equipment has a salvage value of $100k at the end of the project. Calculate the projects net future value at year 25 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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