Lane College in Jackson, Tennessee, Is Considering the Conversion of an Abandoned

question 1

Essay

Lane College in Jackson, Tennessee, is considering the conversion of an abandoned church pew manufacturing plant adjacent to the school's campus into a 34,000- square- foot building to house the campus bookstore, a conference center, a small business incubator, and a community computer lab. The project requires $30 million for renovation costs, additional annual fixed operating and maintenance expenses of $100,000, and variable expenses of 190 per square- foot over a 10- year period. The college expects to generate an annual revenue of $7,810,000 over a 10- year period. The college uses a MARR of 7 percent per year in its economic evaluations of the new project. The market value of the building will be $2 million at the end of 10 years. Write the correct equation to determine if this building should be renovated using the IRR method.

Calculate and interpret the degrees of freedom in correlation analysis.

Understand the conditions under which certain elements in correlation calculation can take negative values.

Apply critical values to make decisions about statistical hypotheses based on Pearson correlation analysis.

Understand the concept of correlation in statistical analysis.

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Definitions:

Straight-Line Method

A depreciation method that allocates an equal amount of the cost of an asset to each year of its useful life.

Scrap Value

The projected amount an asset is expected to generate when it is sold after reaching the end of its lifespan.

Double-Declining-Balance

A method of accelerated depreciation which doubles the rate of straight line depreciation, expensing more of the asset's value in the early years of its life.

Scrap Value

The anticipated market value of an asset at the end of its operational lifetime.