Math Homework

 

 

 

All work must be shown….

 You are currently paying $250 per month to lease your office phone equipment. You have three years (36 months) left on the five year (60 month) lease. What would have been the equivalent purchase price two years ago if the interest rate is 1% per month?(Hint: The units are in months and not years)

 

A small building can be reroofed for $6,000 with aluminum or $3,500 in asphalt shingles.  The estimated lifecycles are 50 years and 15 years respectively.  If the interest rate is 10%, which alternative is superior? (Hint: Find the equivalent uniform annual cost)

 

A large sewer system will cost $175,000 annually.  There will be a favorable benefit to the general public of $500,000 annually.

What is the benefit-cost ratio?

Should the project be constructed and why?

 

A public works project has an initial cost of $1,300,000, benefits with a present value of $1,500,000, and dis-benefits with a present value of $300,000.

What is the benefit-cost ratio?

What is teh excess of benefits over the cost?

Should the project move forward and why?

 

Construction equipment can be purchased for $100,000.  Annual maintenance costs are $18,000.  Using an 8% interest rate, what is the capitalized cost of perpetual service?

(Hint: The service has an infinite life)