Please answer both questions, I would appreciate it greatly! (:

If you cannot see the picture, I have transcribed below:

1.

Consider the following project and its cash flow:

Investment cost $10,000

Expected life 5 years

Market (salvage) value* -$1,000

Annual receipts $8,000

Annual expense -$4,000

* A negative market value means that there is a net cost to dispose of an asset.

a. Determine its PW and FW with MARR 15% per year. Is the project acceptable?

b. What is the IRR? Is the project acceptable?

2.

Your firm is considering the purchase of an old office building with an estimated remaining service life of 25 years. The tenants have recently signed long-term leases, which lead you to believe that the current rental income of $150,000 per year will remain constant for the first 5 years. Then the rental income will increase by 10% for every 5-year interval over the remaining asset life. For example, the annual rental income would be $165,000 for year 6 through 10, $181,500 for year 11 through 15, $199,650 for year 16 through 20, and $219,615 for year 21 through 25. You estimate that operating expenses, including income taxes, will be $45,000 for the first year, and will increase by $3,000 each year thereafter. You estimate that razing the building and selling the lot will realize a net amount of $50,000 at the end of the 25-year period. For a MARR = 12% per year what would be the maximum amount you would pay for the building and lot at the present time?

1. Consider the following project and its cash flow: Investment cost Expected life Market (salvage) value Annual receipts Annual expense $10,000 5 years $1,000 $8,000 $4,000 A negative market value means that there is a net cost to dispose of an asset. a. Determine its PW and FW with MARR 15% per year. Is the project acceptable? b. What is the IRR? Is the project acceptable? Your firm is considering the purchase of an old office building with an estimated re service life of 25 years. The tenants have recently signed long-term leases, which lead you to believe that the current rental income of $150,000 per year will remain constant for the first 5 years. Then the rental income will increase by 10% for every 5-year interval over the remaining asset life. For example, the annual rental income would be $165,000 for year 6 through 10, $181,500 for year 11 through 15, $199,650 for year 16 through 20, and $219,615 for year 21 through 25. You estimate that operating expenses, including income taxes, will be $45,000 for the first year, and will increase by $3,000 each year thereafter. You estimate that razing the building and selling the lot will realize a net amount of $50,000 at the end of the 25-year period. For a MARR-12% per year what would be the maximum amount you would pay for the building and lot at the present time? 2