Question: A construction company plans to complete the soil compaction process within 10 years. Only one machine will operate during this time. The company decides to
A construction company plans to complete the soil compaction process within 10 years. Only one machine will operate during this time. The company decides to buy a new machine that costs 500.000TL and has a 6-year lifespan. Maintenance and operating costs are 50,000TL/year, with an increasing rate of 10,000TL/year. This machine will provide an annual income of 100.000TL during its lifetime and a scrap value of 250,000TL at the end of 6 years. At that time, it is planned to buy another machine with a life of 4 years for 750,000TL and a scrap value of 450,000TL. At the end of the second year of its life, the maintenance and operating cost is estimated to be 100,000 TL. Its annual income is 150.000TL/year, at an increasing rate of 50.000TL/year until the end of its life. Assuming that the interest rate is 7% for the first 6 years and 9% for the next 4 years, find the present value of these investments. Decide whether this project is suitable for investment.
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