An investment company is considering building a new production plant for 25 9/3 production lines for...

 

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An investment company is considering building a new production plant for 25 9/3 production lines for renting. Because of the long-term growth potential of the plant, it is felt that the company could average 90% of the full use of the plant each year. If the following items are reasonably accurate estimates, what is the minimum monthly rent that should be charged per production line if a 10% MARR per year is desired? Use the annual worth (AW) method. Assume that annual upkeep is directly proportional to 90% use óf the plant. Items Money ($) 50,000 225,000 20 years 35 Land cost Plant building cost Study period, n Upkeep expense for unit production line per month Property taxes and insurance per year 10% of the total initial investment An investment company is considering building a new production plant for 25 9/3 production lines for renting. Because of the long-term growth potential of the plant, it is felt that the company could average 90% of the full use of the plant each year. If the following items are reasonably accurate estimates, what is the minimum monthly rent that should be charged per production line if a 10% MARR per year is desired? Use the annual worth (AW) method. Assume that annual upkeep is directly proportional to 90% use óf the plant. Items Money ($) 50,000 225,000 20 years 35 Land cost Plant building cost Study period, n Upkeep expense for unit production line per month Property taxes and insurance per year 10% of the total initial investment

Answer rating: 100% (QA)

Answer Applying Annual Worth Analysis Initial Investment of co Land cost Plant building ... View the full answer