Question
In: Economics
For the following exercise, use as many as appropriate the methods of: annual worth, present worth,...
For the following exercise, use as many as appropriate the methods of: annual worth, present worth, benefit:cost ratio, payback period or internal rate of return. And compare the outcomes of any methods that you use.
Two projects, which are mutually exclusive, are being examined. The cash flows for the two projects are estimated to be as follows, negative signs indicating investments or net outgoings, and positive signs indicating net income. What are the relative merits of the two projects?
|
Year |
Project A ($k) |
Project B ($k) |
|
0 |
-300 |
-400 |
|
1 |
-150 |
-100 |
|
2 |
-50 |
+50 |
|
3 |
+100 |
+150 |
|
4 |
+150 |
+200 |
|
5 |
+150 |
+200 |
|
6 |
+200 |
+300 |
|
7 |
+250 |
+250 |
|
8 |
+250 |
+200 |
|
9 |
+250 |
- |
|
10 |
+150 |
- |
Solutions
Rahul Sunny answered 1 year agoRelated Solutions
5. Compare Present worth analysis, future worth analysis, annual worth analysis and benefit cost ratio analysis...
5. Compare Present worth analysis,
future worth analysis, annual worth analysis and benefit cost ratio
analysis of project evaluation.
given the following data. use present worth analysis to find the best alternative, A, B, or...
given the following data.
use present worth analysis to find the best alternative, A, B,
or C.
Use an analysis period of 12 years and 15% interest.
A B C Initial cost $10,000 15,000 $12,000
Annual Benefit 6,000 10,000 5,000
Salvage benefit 1,000 -2,000 3,000
Useful life 2 years 3 years 4 years
* Use an analysis period of 12 years and 15% interest.
solve using both present worth analysis and
annual worth analysis
given the following data. use present worth analysis to find the best alternative, A, B, or...
given the following data. use present worth analysis to find the
best alternative, A, B, or C. Use an analysis period of 12 years
and 15% interest.
A B C
Initial cost $10,000 15,000 $12,000
Annual Benefit 6,000 10,000 5,000
Salvage benefir 1,000 -2,000 3,000
Useful life 2 years 3 years 4 years
* Use an analysis period of 12 years and 15% interest.
given the following data. use present worth analysis to find the best alternative, A, B, or...
given the following data. use present worth analysis to find the
best alternative, A, B, or C.
Use an analysis period of 12 years and 15% interest.
A B C
Initial cost $10,000 15,000 $12,000
Annual Benefit 6,000 10,000 5,000
Salvage benefit 1,000 -2,000 3,000
Useful life 2 years 3 years 4 years
* Use an analysis period of 12 years and 15% interest.
solve using both present worth analysis and
annual worth analysis
Using the appropriate present value table and assuming a 12% annual interest rate, determine the present...
Using the appropriate present value table and assuming a 12%
annual interest rate, determine the present value on December 31,
2018, of a five-period annual annuity of $6,200 under each of the
following situations: (FV of $1, PV of $1, FVA of $1, PVA of $1,
FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from
the tables provided.)
1.The first payment is received on December 31,
2019, and interest is compounded annually.
2.The first payment is received on...
Using the appropriate present value table and assuming a 12% annual interest rate, determine the present...
Using the appropriate present value table and assuming a 12%
annual interest rate, determine the present value on December 31,
2018, of a five-period annual annuity of $7,700 under each of the
following situations: (FV of $1, PV of $1, FVA of $1, PVA of $1,
FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from
the tables provided.)
1.The first payment is received on December 31,
2019, and interest is compounded annually.
2.The first payment is received on...
Using the appropriate present value table and assuming a 12% annual interest rate, determine the present...
Using the appropriate present value table and assuming a 12%
annual interest rate, determine the present value on December 31,
2018, of a five-period annual annuity of $5,600 under each of the
following situations: (FV of $1, PV of $1, FVA of $1, PVA of $1,
FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the
tables provided.) 1.The first payment is received on December 31,
2019, and interest is compounded annually. 2.The first payment is
received on...
For a present sum of $740,000, determine the annual worth (in then-current dollars) in years 1...
For a present sum of $740,000, determine the annual worth (in
then-current dollars) in years 1 through 3 if the market interest
rate is 10% per year and the inflation rate is 4% per year. The
annual worth is $___ .
The answer is not 1107923.55.
Problem 5.73 Given the following data, use present worth analysis to find the best alternative, A,...
Problem 5.73
Given the following data, use present worth analysis to find the
best alternative, A, B, or C.
Use an analysis period of 12 years and 15% interest.
Please show complete solution procedure, and include
cash flow diagram(s) for each machine.
Machine
A
B
C
Initial
cost
$10,000
$15,000
$12,000
Annual
benefit
$6,000
$10,000
$5,000
Salvage
value
$1,000
$-2,000
$3,000
Useful life
(yrs)
2
years 3
years
4 years
Develop a spreadsheet to determine the net present value or present worth of the following project:...
Develop a spreadsheet to determine the net present value or
present worth of the following project:
Bonus Depreciation: 0%
Investment: 140,000
Revenue/Savings: 25,000
Incremental Expense/Cost: 5,000
Salvage Value: 25,000
Project Life: 10 years
MACRS Schedule: 7 years
Tax Rate: 25%
MARR: 12%
Inflation: 3%
Is this a good investment to make?
Rework the problem with Bonus Depreciation of 50% and
100%
Determine the internal rate of return for the project in the
previous problem with all three levels of Bonus...
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