Question
Sky-tech Telecommunication Company is one of the biggest internet and mobile service providers of the North Kingdom. Although they have a vast mobile service and
Sky-tech Telecommunication Company is one of the biggest internet and mobile service providers of the North Kingdom. Although they have a vast mobile service and internet network all over the country, the company is facing with some connection problems nowadays. The engineers of the company wanted to renew their phone and internet network system with new and faster technology all over the country. However, the network renew process can be really costly for the country. For that reason, an expansive financial analysis was asked to the experts to understand the potential investment cost. If the entire connection network is changed with the new technology, the main project cost will be 150 000 000 usd when the project start. There will be another payment at the year 2 around 100 000 000 usd. The entire renewing process will be completed at the year 4 and the new networks will start to work at the fourth year after the project started. Using the new technologies will also need extra energy consumption. It means that the operation cost for each year will increase to 50 000 usd. The finance experts analyzed the different investment scenarios. Imagine yourself as a finance expert in Sky-tech and help the company by answering the following questions. (Assume interest rate is around % 7 per year)
1)What is the future worth value of the facility and operation costs at the end of year 10?
2)If the company expect 1 000 000 usd profit for each year when operations started (starting year 4), what will be the future worth of the investment at the end of year 10?
3) If the company invest the principal amount 150 000 000 and 100 000 000 usd as uniform series for 10 years. What will be the equivalent annual payment for the company?
4) Assume that the network requires maintenance after 1 years from the operation initiation. The first year of the maintenance will cost 20 000 usd and increases 5 000 usd each year until the years 10. What will be the present worth value?
5) Assume that the network requires maintenance after 1 years from the operation initiation. The first year of the maintenance will cost 20 000 usd and increases with %4 each year. What will be the present worth value?
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