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This business question has 3 parts: A, B, and C. Any help? Suppose a company purchased a piece of equipment for $20,000. The equipment costs
This business question has 3 parts: A, B, and C. Any help?
Suppose a company purchased a piece of equipment for $20,000. The equipment costs $1500 per year to maintain, and $300 per year to insure. The salvage value of the equipment starts at the purchase price and goes down by $1000 per year. If the interest rate is 12%, and if it has been 12 years since the equipment was purchased, what is the cost to own and maintain the equipment for one more year (i.e. the marginal cost)? Don't enter a $ symbol - just the value rounded to the nearest dollar. If Jim has money in the bank earning a market interest rate of 7%, but there is a 4% inflation rate, what is the real (inflation-free) interest rate that Jim is earning? Report your result as a number, rather than as a percent, with 4 digits of precision. For example, 20.769% would be entered as 0.2077. A proposal to build a dam is being evaluated. The initial cost is estimated to be $50,000,000. The net benefit from hydroelectric power from the dam is estimated to be $2,500,000 per year for the 60-year life of the dam. An initial disbenefit for people whose homes and lands will be affected by the dam's construction is estimated to be $4,000,000. Determine the benefit-cost ratio assuming an annual interest rate of 7%. Report your answer to 3 significant figuresStep by Step Solution
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