Answered step by step
Verified Expert Solution
Question
00
1 Approved Answer
can you answer in excel wirh formulas please A new furnace for your small factory is being installed right now, will cost $34 000, and
can you answer in excel wirh formulas please A new furnace for your small factory is being installed right now, will cost $34 000, and will be completed in one year At that point, it will require ongoing maintenance expenditures of $2.200 a year. But it is far more fuel efficient than your old furnace and will reduce your consumption of heating oil by 3,100 gallons per year Heating oil this year costs $3 a gallon the price per gallon is expected to increase by $0.50 a year for the next 3 years and then to stabilize for the foreseeable future. The fumace will last for 20 years from Initial use, at which point it will need to be replaced and will have no salvage volue (Specifically, the firm pays for the turnace at time. and then reaps higher net cash flows from that investment at the end of years 1 - 20). The discount rate is 12%. a. What is the net present value of the investment in the furnace? (Do not round intermediate calculations, Round your answer to the ded nearest whole dollar.) b. What is the IRR? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) c. What is the payback period? (Do not round intermediate calculations. Round your answer to 2 decimal places.) d. What is the equivalent annual cost of the furnace? (Do not round intermediate calculations. Round your answer to 2 decimal places.) e. What is the equivalent annual savings derived from the furnace? (Do not round intermediate calculations. Round your answer to 2 decimal places.) f. Compare the PV of the difference between the equivalent annual cost and savings to your answer to port(o). Are the two measures the same or is one larger? $ a b c NAV IRR Curitive cash fiows are positive Equivalent al cost Equivalent annual savs Are the two measures the same or is one larger? 55,460 20 30 Y4 4493.00 73343 One fanger d $ $ e t
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started