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alexandr1967 [171]
3 years ago
9

A simple, direct space heating system is currently being used in a professional medical office complex. An upgraded "variable ai

r-volume system" retrofit can be purchased and installed for $200,000 (investment cost). Its power savings in the future will be 500,000 kilo-Watt hours per year over its estimated life of 8 years. The cost of electricity is $0.10 per kilo-Watt hour. If the firm’s cost of capital is 12% per year and the residual value of the system in 8 years is $20,000, should the new system be purchased? Use the present worth method.
Business
1 answer:
Ivan3 years ago
4 0

Answer:

Since the present worth (PW) is $56,459.65 and positive, the new system should be purchased.

Explanation:

C = Cost of the upgraded "variable air-volume system" retrofit = $200,000

S = Residual value of the system = $20,000

n = Estimated life of the upgraded "variable air-volume system" retrofit = 8

r = cost of capital per year = 12%, or 0.12

P = Amount of power savings per year = Number of kilo-Watt hours per year * Cost of electricity per kilo-Watt hour = 500,000 * $0.10 = $50,000

Using the formula for calculating the present value (PV) or ordinary annuity, the PV of P can be calculated:

PV of P = P * ((1- (1/(1 + r))^n) / r) = $50,000 * ((1- (1/(1 + 0.12))^8) / 0.12) = $248,381.99

The PV of the residual value (PV of S) can be calculated as follows:

PV of S = S / (1 + r)^n = $20,000 / (1 + 0.12)^8 = $8,077.66

The present worth (PW) can now be calculated as follows:

PW = PV of P + PV of S - C = $248,381.99 + $8,077.66 - $200,000 = $56,459.65

Since the present worth (PW) is $56,459.65 and positive, the new system should be purchased.

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4 0
1 year ago
The practice of changing prices for products in real time in response to supply and demand conditions is referred to as
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Dynamic pricing

Explanation:

In simple words, Dynamic pricing, often alluded to as rising rates, vibrant pricing as well as period-based pricing, relates to the pricing technique under which companies set variable prices for goods or commodities on the basis of existing consumer demands. A main benefit of competitive pricing seems to be the opportunity to increase the income with each consumer.

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3 years ago
Chewy Candy has a beginning inventory of $1,000 with a retail value of $1,800. June purchases were $3,000, with a retail value o
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A. $351

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3 years ago
what is the purpose of this media message? to inform people that they have the opportunity to support a cause to inform people t
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The purpose of this media message is to inform people that they have the opportunity to save money. Thus, option B is correct.

What is the media?

Media refers to any route of transmission. This can range from written paper to electronic material, and it provides data in a broad range of forms, including art, journalism, and instructional materials.

A media message is a form of communication that eventually contributes to a viewer, including a television program, website, news article, advertising, or status update through which the information can be conveyed.

As there needs to be a message that needs to be sent to the people, that means that the message can be conveyed that the people need to save money as well as the methods can also be said or be specified in the same with the help of any medium that can be possible. Therefore, option B is the correct option.

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3 0
1 year ago
Barbara is a producer in a monopoly industry. Her demand​ curve, total revenue​ curve, marginal revenue​ curve, and total cost c
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Answer:

D

Explanation:

Profit is Maximize when MR = MC

since MR=40 - 0.5Q

and  MC= 4

Therefore:

40-0.5Q = 4

-0.5Q = 4 - 40

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divide through by -0.5

Q = 72

since Q = 72

from Q = 160 - 4p

72 = 160 - 4P

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-4P = -88

divide through by -4

P = 22

5 0
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