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Question: 1 valley rendering inc is considering purchasing a new flotation...

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1. Valley Rendering, Inc. is considering purchasing a new flotation system for recovering more grease. The company can finance a $150,000 system at 5% per year compound interest or 5.5% per year simple interest. If the total amount owed is due in a single payment at the end of 3 years, (a) which interest rate should the company select, and (b) how much is the difference in interest between the two schemes? (ANSWER: (b) $1106.) 2. A mechanical consulting company is examining its cash flow requirements for the next 7 years. The company expects to replace office machines and computer equipment at various times over the 7-year planning period. Specifically, the company expects to spend $7000 two years from now, $9000 t five years from now. What is expenditures at an interest rate of 10% per year? (ANSWER: $15651) three years from now, and S5000 the present worth of the planned 3. A green algae, chlamydomonas reinhardtii, can produce hydrogen when temporarily deprived of sulfur for up to two days at a time. How much could a small company afford to spend now to commercialize the process if the net value of the hydrogen produced is $280,000 per year? Assume the company wants to earn a rate of return of 18% per year and recover its investment in 8 years. (ANSWER: $1,141,728) 4. A concept car that will get 100 miles per gallon and carry 4 persons would have a carbon-fiber and aluminium composite frame with a 900 cc three cylinder turbodieselVelectric hybrid power plant. The extra cost of these technologies is estimated to be S11,000. If gasoline savings over a comparable conventional car would be $900 in year 1, increasing by 10% each year, what is the present worth of the savings over a 10-year period at an interest rate of 8% per year? (ANSWER: $9063.21) 5. Shifted cash flow: Revenue from gas wells that have been in production for at least 5 years tends to follow a decreasing geometric gradient. One particular rights holder received royalties of $4000 per year for years through 6 (i.e. six times), but beginning in year 7, income decreased by 15% per year through year 14 (geometric gradient of 15%). What was the future value (year 14) of the income from the well, ifall of the income was invested at 10% per year? (ANSWER: $91,601)
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