The owner of an office building wants to know if it is less costly - in terms of both up-front costs and in paying the electric bills - for a new energy efficient fluorescent lighting system, compared to the present lighting system. The time period that the owner wants to consider is 7 years, since the new lighting system could be installed using an equipment lease. The interest rate that the owner will pay on the lease is 10%, so this is the minimum attractive rate of return on this investment. The annual costs that can be compared by economic analysis methods are:
- Capital cost of lighting systems: Zero for the existing lighting system compared to $20,000 for the new.
- Energy costs for lighting systems: $16,000 per year for the existing lighting, $10,400 per year for the new lighting. Cost for operations and maintenance: $500 per year for the existing lighting, zero for the new lighting. - Cost of equipment repair: $2000 per year for the existing lighting, zero for the new lighting.
- Cost for equipment replacement: $300 per year for the existing lighting, zero for the new lighting.
What is the difference in the NPV after 7 years when comparing the new lighting system to the old?]
Is the investment worth making?
What is the NPV when a discount rate equal to the IRR is used for n = 7 years?
What is the IRR after 7 years?
Answers
The difference in NPV after 7 years, comparing the new lighting system to the old, is the NPV of the existing lighting system minus the NPV of the new lighting system. The investment is worth making if the difference in NPV is positive. The NPV when a discount rate equal to the Internal Rate of Return (IRR) is used for 7 years can be calculated, and the IRR after 7 years can be determined.
The difference in the Net Present Value (NPV) after 7 years when comparing the new lighting system to the old, we need to calculate the NPV for each system and then find the difference.
Let's calculate the NPV for each lighting system:
Existing Lighting System:
- Capital cost: Zero
- Energy costs: $16,000 per year
- Cost of operations and maintenance: $500 per year
- Cost of equipment repair: $2,000 per year
- Cost of equipment replacement: $300 per year
New Lighting System:
- Capital cost: $20,000
- Energy costs: $10,400 per year
- Cost of operations and maintenance: Zero
- Cost of equipment repair: Zero
- Cost of equipment replacement: Zero
Using the NPV formula, which calculates the present value of each cost at the given discount rate, we can calculate the NPV for each system over 7 years.
NPV = Σ(Cost / (1 + r)^t)
Where:
- Cost is the annual cost
- r is the discount rate
- t is the year (from 1 to 7)
Let's calculate the NPV for each system:
Existing Lighting System:
NPV = (16,000 / (1 + 0.1)^1) + (500 / (1 + 0.1)^1) + (2,000 / (1 + 0.1)^1) + (300 / (1 + 0.1)^1)
+ (16,000 / (1 + 0.1)^2) + (500 / (1 + 0.1)^2) + (2,000 / (1 + 0.1)^2) + (300 / (1 + 0.1)^2)
+ ...
+ (16,000 / (1 + 0.1)^7) + (500 / (1 + 0.1)^7) + (2,000 / (1 + 0.1)^7) + (300 / (1 + 0.1)^7)
New Lighting System:
NPV = (-20,000 / (1 + 0.1)^1) + (10,400 / (1 + 0.1)^1)
+ (-20,000 / (1 + 0.1)^2) + (10,400 / (1 + 0.1)^2)
+ ...
+ (-20,000 / (1 + 0.1)^7) + (10,400 / (1 + 0.1)^7)
Now we can calculate the NPV for each system and find the difference:
NPV_existing = (16,000 / 1.1) + (500 / 1.1) + (2,000 / 1.1) + (300 / 1.1)
+ (16,000 / 1.1^2) + (500 / 1.1^2) + (2,000 / 1.1^2) + (300 / 1.1^2)
+ ...
+ (16,000 / 1.1^7) + (500 / 1.1^7) + (2,000 / 1.1^7) + (300 / 1.1^7)
NPV_new = (-20,000 / 1.1) + (10,400 / 1.1)
+ (-20,000 / 1.1^2) + (10,400 / 1.1^2)
+ (-20,000 / 1.1^3) + (10,400 / 1.1^3)
+ (-20,000 / 1.1^4) + (10,400 / 1.1^4)
+ (-20,000 / 1.1^5) + (10,400 / 1.1^5)
+ (-20,000 / 1.1^6) + (10,400 / 1.1^6)
+ (-20,000 / 1.1^7) + (10,400 / 1.1^7)
Please note that the pattern continues until the seventh year.
To learn more about Internal Rate of Return refer here:
https://brainly.com/question/31870995#
#SPJ11
Related Questions
PLEASE HELP QUICKLY: (FIRST ANSWER GETS BRAINLIEST)
Alex bought a new television at Christmas. Now that same television costs $200 less than her purchase price. What does this example BEST demonstrate?
A. income risk
B. interest rate risk
C. inflation risk
Answers
Answer: С. inflation risk
Explanation:
You're welcome :)
Alex received a new television for Christmas. This is best described as inflation risk because the same television now costs $200 less than her purchase price. Option C is correct.
What is inflation risk?Inflationary risk is defined as the risk that inflation will cut down the returns on an investment by trimming purchasing power. This is basically means that the value of money at present will reduce the amount of money in the upcoming time period.
The given scenario best explains that the value of television that was purchased in Christmas, will reduce after some time, denoted the example of inflation risk.
Therefore, option C is correct.
Learn more about the inflation, refer to:
https://brainly.com/question/15692461
#SPJ2
What is the main difference between a market and a command economy?
Answers
Answer:
Market economies utilize private ownership as the means of production and voluntary exchanges/contracts. In a command economy, governments own the factors of production such as land, capital, and resources. Most nations operate largely as a command or market economy but all include aspects of the other.
According to the video, what do many Accountants and Auditors decide to do?
O specialize in a specific area
O volunteer in schools to teach finance
become Managers later in their careers
O take writing classes
Answers
Answer:
A. Specialize in a specific area
Explanation:
Just got right on E 2020
According to the video, the many Accountants and Auditors decide to do specialize in a specific area. The correct option is (A).
What do you mean by the Auditors?An auditor is a person qualified to examine financial documents, confirm their accuracy, and make sure businesses are following tax regulations.
A physical inventory check is followed by an auditor's review or inspection of various books of accounts to ensure that all departments are using the same documented system of documenting transactions.
It's done to make sure the organization's financial accounts are accurate. Internal audits, external audits, and government or IRS audits are the three basic categories of audits. Your financial reports will be examined and verified during an audit.
Therefore, according to the video, the many Accountants and Auditors decide to do specialize in a specific area.
To know more about the Auditors, visit:
https://brainly.com/question/28457117
#SPJ2
Explain the concept of an opportunity cost with an appropriate example
Answers
Answer:
Explanation:
Opportunity cost is an economics tool that is useful in the process of making a choice of goods and services in order to ensure that scarce resources are used efficiently.
The opportunity cost of a product or service is the name given to an income that could be earned when such product or service is put to an alternative use.
It can also be described as the cost of the alternative forgone to achieve a particular product or service
For an example , if a student decides to give up on watching a movie to study for his exam , the opportunity cost of the exam is the cost and pleasure related to the movie
If an economy is in recession, discuss the differing effects created by a tax cut vs. A GDP-G increase to close the gap. Use the concept of multipliers in your answer.
Answers
Answer:
Explanation:
increase government spending will result in increased aggregate demand, which then increases the real GDP, resulting in an rise in prices. ... Conversely, to close an expansionary gap, the government would increase income taxes, which decreases aggregate demand, the real GDP, and then prices.
Economic recession takes place because of fluctuation within the variation. When the contraction point of the trade cycle prolongs or stays for quite six months then recession takes place in an economy. it's a situation when the entire economy shrinks down.
GDPwhen increased government spending will end in increased aggregate demand, which then increases the 000 GDP, as a lead to an increase in prices. Also Conversely, to shut an expansionary gap, the govt. would increase income taxes, which decreases aggregate demand, the important GDP, and also then prices.
Find out more information about GDP here:
https://brainly.com/question/26261960
Rocky Point Brewery (RPB) filed an initial public offering in January 2018. RPB engaged Olsen & Alain, CPAs, (O&A) in 2015 to keep the books and prepare monthly and annual financial statements (while the company was privately held), and terminated those services in December 2018. Under SEC and PCAOB rules, could RPB engage O&A to be their auditors now that it is a public company? a. Yes, because the prohibited nonaudit services were performed before the period of professional engagement. b. Yes, but only if O&A rescinds any indemnification language existing in their nonaudit engagement letters. c. No, because the prohibited nonaudit services were performed during the period covered by the financial statements. d. No, but only if the fees O&A received from these engagements exceeded five percent of the firm's annual revenues.
Answers
Answer: No, because the prohibited non-audit services were performed during the period covered by the financial statements.
Explanation:
The aim of the Securities and Exchange Commission is to protect the investors and also maintain a fair, and an efficient market.
We should note that Under SEC and PCAOB rules, RPB cannot engage O&A to be their auditors now that it is a public company because the prohibited non-audit services were performed during the period covered by the financial statements.
If costs are accurately estimated when establishing an annual predetermined overhead rate, there should never be an overapplied or underapplied overhead balance.
Select one:
True
False
Answers
The given statement is false because even if costs are accurately estimated, there can still be differences between actual and estimated overhead costs, leading to overapplied or underapplied overhead. Option b is correct.
Even if costs are accurately estimated when establishing an annual predetermined overhead rate, there can still be situations where the actual overhead costs incurred differ from the estimated amount. This can lead to either overapplied or underapplied overhead.
Overapplied overhead occurs when the actual overhead costs are lower than the estimated amount, resulting in an excess of applied overhead. Underapplied overhead, on the other hand, happens when the actual overhead costs exceed the estimated amount, leading to a shortfall in applied overhead.
These variances can occur due to various factors such as changes in production volume, unexpected expenses, or inaccuracies in cost estimates. To address overapplied or underapplied overhead, companies typically make adjusting entries at the end of the accounting period to allocate the difference and bring the applied overhead in line with the actual overhead costs incurred. Option b is correct.
To know more about costs, here
https://brainly.com/question/17120857
#SPJ4
Which of the following is a personal benefit of eaming a college degree?
A. You have more friends.
B. You are more likely to exercise.
C. You have a longer life expectancy.
D. You are more likely to vote for the right candidate.
Answers
Answer:
Option B !!!!! :))
Explanation:
Dr. Peabody recorded $6,820 in services provided to clients who make monthly payments. Which of the following statements is correct?
A. The dental revenues account is debited $6,820; accounts receivable is credited $6,820.
B. Accounts receivable is credited $6,820; the dental revenues account is credited $6,820.
C. Accounts receivable is debited $6,820; the dental revenues account is debited $6,820.
D. Accounts receivable is debited $6,820; the dental revenues account is credited $6,820.
Answers
Answer:
D. Accounts receivable is debited $6,820; the dental revenues account is credited $6,820.
Explanation:
The two accounts that are affected here are accounts receivables ( Assets) and the revenue account ( affects capital). The accounts receivable will increase as payment is expected at the end month. Since receivable are assets, an increase in receives is recorded as a debit of the account receivable account. $ 6,820 will be debited on the accounts receivables.
The services rendered increases the revenue to Dr. Peabody. Revenue is considered a capital account because it increases the owner's equity. An increase in a capital account is credited. Dr. Peabody will credit the dental revenue account with $6,820.
With reference to message transmission, in which case is the reception of the message normally high?
a. When the message is communicated through mass media
b. When a sales pitch is given by a sales representative to a potential client
c. When the message is cluttered by noise
d. When the message is communicated through newspapers or television
Answers
The reception of the message is normally high when the message is communicated through mass media.
Mass media channels, such as television, radio, and social media, have the ability to reach a wide and diverse audience, making them an effective means of transmitting messages to a large number of people. This broad reach allows for the message to reach a vast audience and is ideal for disseminating information, creating awareness, and shaping opinions. Additionally, mass media messages are often well-produced and professionally crafted, making them more engaging and impactful.
On the other hand, when a sales pitch is given by a sales representative to a potential client, the reception of the message may not always be high. While sales pitches may be tailored to the specific needs and interests of the potential client, they can also be perceived as intrusive or pushy, leading to resistance or skepticism from the client.
Learn more about mass media: brainly.com/question/30693608
#SPJ11
The data on price and quantity purchased relating to a commodity for 10 months are given
below:Calculate coefficient of correlation between price and quantity.
Answers
Price and number of goods purchased are inversely correlated. Consequently, price rises as quantity rises.
What is data on price ?Pricing Data is accurate information on the costs of goods that are strikingly comparable to those being purchased. Prices are used interchangeably in this definition to refer to actual selling prices as well as suggested or prospective selling prices. Data pertinent to both primary and subcontract prices are referred to in the definition. Data may consist of specific costs, weights, addresses, names, ages, temperatures, dates, or distances, for instance. Data is a basic type of knowledge and has no meaning or use by itself. In other words, facts must be interpreted in order to have any significance. A pricing list again for new term has been sent by the Contractor to authorized buyers.
To know more about data on price visit:
brainly.com/question/29310320
#SPJ1
What traits helped Oprah Winfrey become successful and why
Answers
Relevant. Oprah has always stayed relevant. ...
Motivational. She is one of the most
inspirational and motivational people of our time. ...
Passionate. Oprah's passion is displayed in all of her accomplishments. ...
how much would you need to deposit in an account now in order to have $2000 in the account in 15 years? assume the account earns 6% interest compounded quarterly. round your answer to the nearest cent.
Answers
In order to have $2000 in an account in 15 years with an interest rate of 6% compounded quarterly, you would need to deposit $1,037.19 now.
To calculate this, we can use the formula for compound interest: A = P (1 + r/n)^(nt), where A is the future value of the account, P is the initial deposit, r is the interest rate, n is the number of times the interest is compounded in a year, and t is the number of years the money is deposited for.
In this case, P is the amount we need to deposit now, A is 2000, r is 0.06, n is 4 (since the interest is compounded quarterly), and t is 15. We can solve for P to get P = $1,037.19.
Therefore, in order to have $2000 in an account in 15 years with an interest rate of 6% compounded quarterly, you would need to deposit $1,037.19 now.
To learn more about interest rate here:
https://brainly.com/question/29415701#
#SPJ11
What is Gravitational law and how yo solve it
Answers
Explanation:
I believe this is what you are asking for, Newton's law of gravitation.
The law of Newton's universal-gravitation states that every particle will attract every other particle in the universe. The force that attracts this is a force that is directly proportional to a product of the mass.
If the product or service you sell is taxable, you must obtain is ———— A. A sales tax permit B. An employer identification number C. A business checking account D. Business cards
Answers
Answer:
The answer I prefer is
Explanation:
An employer identification number.
Hope this helps....
Have a nice day!!!!
what is spam?
A unauthorized email featuring anonymous threats
B unauthorized email asking for sensitive information
C unauthorized email advertising services and events
D unauthorized email accidentally sent to the wrong address
Answers
Hope this helped
the process of using information to link customers, consumers, and the public to the marketer is referred to as _____.
Answers
Answer:
the process of using information to link customers, consumers, and the public to the marketer is referred to as marketing Research!!
go for it!!
why do we rewrite contracts if adding slp enterprise
Answers
We rewrite contracts if adding SLP (Supplemental Liability Protection) enterprise because they will provide a certificate of insurance showing proof that the other organization has been added to the policy.
Supplemental Liability Insurance (SLI) protects you from any harm to other motorists' bodies as well as damage to their cars.
In some nations, the car owner, or the rental firms, are required to provide this "third party" insurance.
In the event of an accident or crash for which you were not at fault, SLI will cover all claims filed by a third party for bodily harm, wrongful death, or damage to the third party's property.
To know more about Liability Insurance,
https://brainly.com/question/988187
#SPJ4
who wants to play among us with me
Answers
How does managing the production process impact business operations?
Answers
Answer:
Production management helps the firm to achieve its sales and business objectives by producing goods and services
Explanation:
Production management helps the firm to achieve its sales and business objectives by producing goods and services that meet the need of consumers. Sales and profit will increase if the product produced satisfies the customers' needs.
Answer:
Reduces Manufacturing Cost – By maximizing outputs while minimizing inputs, production management lowers the cost required to produce finished products. This can be used to improve profit margin, or it may be passed onto the customer to ensure a competitive advantage.
The law of demand states that:
O A. demand for a.product rises when its price falls.
B. demand for a product rises when its supply falls.
C. demand for a product falls when its price falls.
D. demand for a product rises when its supply rises.
Answers
Does the state of the US economy have an effect on local businesses started by entrepreneurs? Please explain your answer.
Answers
The state of the United States' economy has an effect on local businesses that are started by entrepreneurs as it determines the amount of sales that the local business would make.
How does the U.S. economy affect local businesses?The state of the U.S. economy determines the income level of the average person in America. If the economy is doing well, then people generally have more income than if the economy is performing poorly.
When the economy is doing well and people have more income, they will be able to buy more goods and services from businesses including the local businesses established by entrepreneurs. If the reverse is the case, then local businesses would generally suffer when the economy is bad and people have less income.
There are also local businesses that see their income increase when the economy is doing poorly for instance, financial planners and health care.
In conclusion, local businesses started by entrepreneurs get affected by the state of the U.S. economy.
Find out more on the effect of the economy on business at https://brainly.com/question/13721949
#SPJ1
looking at the welfare implications of a price floor in a market for a specific good or service, a price floor will cause
Answers
Looking at the welfare implications of a price floor in a market for a specific good or service, a price floor will cause some negative effects. The price floor will lead toan increase in price.
This will encourage suppliers to increase their supply of the good or service. However, the price increase will discourage some buyers from purchasing the good or service leading to a decrease in demand. The resulting surplus of good or service forces suppliers to lower their prices, resulting in lost revenue.
Along with this, a price floor can lead to inefficiencies as it can cause suppliers to offer goods and services that are not demanded by the market. As a result, the welfare implications of a price floor are thus unfavorable since they can cause market inefficiencies and reduce economic welfare.
To learn more about Price floor:
https://brainly.com/question/29425092
#SPJ4
which of the following events would increase the supply of tomatoes? group of answer choices the introduction of mechanized tomato pickers, which raises the cost of production. a decrease in the price of pasta products. an increase in wages for the tomato pickers. unseasonably hot, dry weather in the tomato-growing regions of the nation. a decrease in the cost of fertilizers for the tomato plants.
Answers
The correct option is d. Supply of tomatoes would increase if there is a decrease in the cost of fertilizers for the tomato plants.
A basic economic notion called supply refers to the total amount of a particular commodity or service that is made available to consumers. Supply can be defined as the quantity offered at a particular price or, if shown on a graph, the quantity offered over a range of cost. This is directly related to the demand for an item or service at a particular price; all things being equal, the supply offered by manufacturers will increase if the price rises because all businesses aim to maximise profits. The modern economy is based on movements in supply and demand.
Learn more about supply here:
https://brainly.com/question/28285610
#SPJ4
1. What is a business plan?
Answers
Answer:
It's simple, what you want to do with your business. Or what your planning to do with it.
To buy a product, customers in a market must first
Answers
To buy a product, customers must first have the need for the product.
Customers cannot just simply buy anything or everything when it comes to products. People love shopping but money is a very useful and powerful resource and customers understand it well, so they don't want to spend it on useless things.
Firstly, there should be a need or a desire to buy a particular product. After that the customer decides his or her budget or the money he would like to spend on that product. If it crosses his or her budget, then the customer may not able to buy the product.
Lastly, there should be willingness to buy the product. Nowadays, we get impressed by big brands, malls and stores giving us immense discounts for even our daily needs. That is how knowingly or unknowingly, we tend to shop more.
To know more about Customers here
https://brainly.com/question/14530604
#SPJ1
since converting the firm's inventory to profits is a key function of management, firms use to measure the effectiveness of management in utilizing the assets that are available. multiple choice question. leverage ratios
Answers
The statement suggests that firms use a ratio to measure the effectiveness of management in utilizing the assets that are available, and the options provided are leverage ratios.
Leverage ratios are a type of financial ratio that measure the extent to which a company is using debt to finance its operations and investments. While leverage ratios can provide insight into a company's financial health the options provided are leverage ratios and the effectiveness of its management, they are not specifically designed to measure how well management is converting inventory to profits. Therefore, the statement and options do not seem to match. The statement suggests that firms use a ratio to measure the effectiveness of management in utilizing the assets that are available, and the options provided are leverage ratios.
Learn more about leverage ratios here
https://brainly.com/question/28317868
#SPJ4
Bart, Inc., a newly organized corporation, uses the equity method of accounting for its 30% investment in Rex Co.'s common stock. During 20X5, Rex paid dividends of $300,000 and reported earnings of $900,000. In addition: The dividends received from Rex are eligible for the 80% dividends-received deduction. All the undistributed earnings of Rex will be distributed in future years. There are no other temporary differences. Bart's 20X5 income tax rate is 30%. The enacted income tax rate after 20X5 is 25%. In Bart's December 31, 20X5 balance sheet, the deferred income tax liability should be
Answers
Answer:
The right answer is "$9,000". A further explanation is given below.
Explanation:
The given values are:
Rex paid dividends,
= $300,000
Reported earnings,
= $900,000
Investment,
= 30%
Taxable rate applicable,
= 25%
Now,
Throughout the future years, the amount of dividends taxable will be:
= \((900,000 - 300,000)\times 30 \ percent\)
= \(180,000\) ($)
Dividends received deduction will be:
= \(180,000\times 80 \ percent\)
= \(144,000\) ($)
then,
Net taxable dividend will be:
= \(180,000-144,000\)
= \(36,000\)
hence,
Deferred tax liability will be:
= \(36,000\times 25 \ percent\)
= \(9,000\) ($)
An integrated set of performance measures that are derived from the company's strategy is ______.
Answers
An integrated set of performance measures that are derived from the company's strategy is the balanced scorecard,
The Balanced Scorecard is a management system designed to translate an organization's strategic objectives into a set of organizational performance objectives that are measured and monitored as needed to ensure that the organization's strategic objectives are met. , and fixed.
Balanced Scorecard is a strategic performance management tool. A well-structured report that managers can use to track the execution of activities by employees under their control and monitor the results of those actions.
Learn more about balanced scorecard here: https://brainly.com/question/19259487
#SPJ4
Determining the worst payoff for each alternative and choosing the alternative with the best worst is called?
Answers
Determining the worst payoff for each alternative and choosing the alternative with the best worst is called Laplace.
What is alternative?
Alternative is a term used to describe something that deviates from accepted norms. One example of an alternative medical procedure is acupuncture. Alternative Use denotes a use for the asset that was not conceivably possible prior to the loss. One exception is that newer equipment could come with features that weren't even thought of when the old, broken equipment was purchased. You cannot avoid making those improvements.
Therefore,
Determining the worst payoff for each alternative and choosing the alternative with the best worst is called Laplace.
To learn more about alternative from the given link:
https://brainly.com/question/27191287
#SPJ4