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SteveS, MBA
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What is the present value of your monthly retirement check

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What is the present value of your monthly retirement check of $2,000 (your estimate) to be received when you turn 65 (in 25 years) if you think inflation will be 6 percent a year?

Your company is considering the purchase of an automated envelope stuffing system. The system will cost approximately $12,500. It is estimated you will save $3,450 per year on reduced overtime by using this system. There is no salvage value after the 10-year life of the system. Please calculate the payback period for this investment.

You own an aluminum extrusion company. Your plant manager has recommended a new extrusion machine be bought for $250,000. He says it will save $65,000 per year in reduced labor costs and reduced aluminum waste. The machine will have a life of 8 years with no salvage value. Your required rate of return is 10%. Please calculate the net present value of this investment. Should you make the investment?

Your company is evaluating conversion of its truck fleet to propane. The price of propane is less than gasoline. You have collected the following information (all on a per vehicle basis): initial investment 3,500; annual cost of buying propane 6,500; annual cost of buying gasoline 7,900; your required return is 8 percent; life of the project is 5 years. Please calculate the net present value of the project. Would your recommend this investment? Why or why not?
Submitted: 7 years ago.
Category: Homework
Expert:  SteveS replied 7 years ago.

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