Problem 1. (10 points). You have invented and constructed a novel power generation device and are...

 

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Problem 1. (10 points). You have invented and constructed a novel power generation device and are looking into the costs: Maintenance of the device: $1500 per month. • Installation cost: $10,000 . ● Revenues from power sold to the utility company: $2,500 per month Cost of a part-time operator of the device: $1,000 per month Other miscellaneous costs: $1,250 per month. At the end of ten years, you plan to retire and hope to sell the device for $35,000 at that time. a) Identify the initial cost, the annuities (including income and expenses), the salvage value, and the lifespan of the project. b) Calculate the net present value of the project. c) Is the restaurant a financially viable project? Justify your answer. d) If the answer to c) is NO, determine two changes that can make it viable. Problem 1. (10 points). You have invented and constructed a novel power generation device and are looking into the costs: Maintenance of the device: $1500 per month. • Installation cost: $10,000 . ● Revenues from power sold to the utility company: $2,500 per month Cost of a part-time operator of the device: $1,000 per month Other miscellaneous costs: $1,250 per month. At the end of ten years, you plan to retire and hope to sell the device for $35,000 at that time. a) Identify the initial cost, the annuities (including income and expenses), the salvage value, and the lifespan of the project. b) Calculate the net present value of the project. c) Is the restaurant a financially viable project? Justify your answer. d) If the answer to c) is NO, determine two changes that can make it viable.

Answer rating: 100% (QA)

a Initial cost 10000 annuiites 10000 ... View the full answer