1. Calculate the annualized value of a building that would cost $1 million to replace and has a life of 25 years. Use interest rates of 5%, 10%, and 15%. Show your calculations not just the final answers.
2. Assume that a piece of equipment has a replacement cost of $10,000 and an 8-year life. Calculate its annualized cost at an interest rate of 15%. Show your calculations.
3. Calculate the annualized value of a building that would cost $1 million to replace and has a life of 25 years. Use interest rates of 5%, 10%, and 15%. Show your calculations not just the final answers.
4. What are shadow prices and when should they be used to estimate the cost of ingredients? Give an example.
5. What are market prices and when should they be used to determine the cost on ingredients? Give an example.