please show excel formulas so I can understand the problem
THANKS
Homework Answers
(a)
| Year (n) | Cash flow from project A (CF) | Cumulative cash flow | Cash flow from project B (CF) | Cumulative cash flow | Cash flow from project C (CF) | Cumulative cash flow | Cash flow from project D (CF) | Cumulative cash flow |
| 0 | -$75 | -$75 | -$50 | -$50 | -$15 | -$15 | -$90 | -$90 |
| 1 | $18.8 | -$56 | $13.9 | -$36 | $4.5 | -$10.5 | $23.8 | -$66.2 |
| 2 | $18.8 | -$37 | $13.9 | -$22 | $4.5 | -$6.0 | $23.8 | -$42.4 |
| 3 | $18.8 | -$19 | $13.9 | -$8 | $4.5 | -$1.5 | $23.8 | -$18.6 |
| 4 | $18.8 | $0.2 | $13.9 | $6 | $4.5 | $3.0 | $23.8 | $5.2 |
| 5 | $18.8 | $19 | $13.9 | $20 | $4.5 | $7.5 | $23.8 | $29.0 |
| (In Years) | ||||||||
| Payback Period for project A = | 3.99 | |||||||
| Payback Period for project B = | 3.60 | |||||||
| Payback Period for project C = | 3.33 | Lowest | ||||||
| Payback Period for project D = | 3.78 | |||||||
| Payback Period (period where cumulative cash flow is zero) = X + (Y/Z) | ||||||||
| Where, | ||||||||
| X = Last period with a negative cumulative cash flow; | ||||||||
| Y = Absolute value of cumulative cash flow at the end of the period X; | ||||||||
| Z = cash flow during the period after X. | ||||||||
Project C should be selected as it has lowest payback period
(b)
| Year (n) | Cash flow from project A (CF) | Future worth [=CF*(1+MARR)^(5-n)] | Cash flow from project B (CF) | Future worth [=CF*(1+MARR)^(5-n)] | Cash flow from project C (CF) | Future worth [=CF*(1+MARR)^(5-n)] | Cash flow from project D (CF) | Future worth [=CF*(1+MARR)^(5-n)] | Formula used |
| 0 | -$75 | -$121 | -$50 | -$81 | -$15 | -$24 | -$90 | -$145 | CF*(1+10%)^5 |
| 1 | $18.8 | $28 | $13.9 | $20 | $4.5 | $6.6 | $23.8 | $35 | CF*(1+10%)^4 |
| 2 | $18.8 | $25 | $13.9 | $19 | $4.5 | $6.0 | $23.8 | $32 | CF*(1+10%)^3 |
| 3 | $18.8 | $23 | $13.9 | $17 | $4.5 | $5.4 | $23.8 | $29 | CF*(1+10%)^2 |
| 4 | $18.8 | $21 | $13.9 | $15 | $4.5 | $5.0 | $23.8 | $26 | CF*(1+10%)^1 |
| 5 | $18.8 | $19 | $13.9 | $14 | $4.5 | $4.5 | $23.8 | $24 | CF*(1+10%)^0 |
| Net Future Worth (Sum of future worth) | -$6.01 | $4.34 | $3.32 | $0.36 | |||||
| Highest |
Project B should be selected as it has highest net future Worth
(c)
To calculate benefit-cost (B-C) ratio, first we have to calculate present worth (PW) of benefits and present worth of cost.
The cost is at zero periods therefore its present worth of cost (C)
| Year (n) | Cash flow from project A (CF) | Present Worth of benefits [=CF/(1+MARR)^n] | Cash flow from project B (CF) | Present Worth of benefits [=CF/(1+MARR)^n] | Cash flow from project C (CF) | Present Worth of benefits [=CF/(1+MARR)^n] | Cash flow from project D (CF) | Present Worth of benefits [=CF/(1+MARR)^n] | Formula used |
| 0 | -$75 | -$50 | -$15 | -$90 | |||||
| 1 | $18.8 | $17 | $13.9 | $13 | $4.5 | $4.1 | $23.8 | $21.6 | CF/(1+10%)^1 |
| 2 | $18.8 | $16 | $13.9 | $11 | $4.5 | $3.7 | $23.8 | $19.7 | CF/(1+10%)^2 |
| 3 | $18.8 | $14 | $13.9 | $10 | $4.5 | $3.4 | $23.8 | $17.9 | CF/(1+10%)^3 |
| 4 | $18.8 | $13 | $13.9 | $9 | $4.5 | $3.1 | $23.8 | $16.3 | CF/(1+10%)^4 |
| 5 | $18.8 | $12 | $13.9 | $9 | $4.5 | $2.8 | $23.8 | $14.8 | CF/(1+10%)^5 |
| Present Worth of Benefits | $71.27 | $52.69 | $17.06 | $90.22 | |||||
| Benefit/cost ratio (B/C ratio) (PW of benefits/PW of cost) | 0.95 | 1.05 | 1.14 | 1.00 | |||||
| Highest |
Project C should be selected as it has highest B/C ratio
Add Answer to:
please show excel formulas so I can understand the problem
THANKS
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please show excel formulas so I can understand the problem thanks 9-59 Two equipment investments are...
please show excel formulas so I can understand the problem
thanks
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2) [Problem 9-50) Consider four mutually exclusive alternatives: A B C D Cost $65 $55 $25 $80 Uniform annual benefit 16.3 15.1 2 5. 2 1.3 AL Each alternative has a 6-yeatuseful life and no salvage value. The MARR is 9%. Which alternative should be selected, based on, ? a) The payback period b) Future worth analysis c) Benefit-cost ratio analysis
Do not use Excel or tables
9-54 Three mutually exclusive alternatives are being considered: Initial cost Benefit at end of the first $500 $400 $300 200 200 200 100 4 year Uniform benefit at end of 100 125 subsequent years Useful life, in years At the end of its useful life, an alternative is not replaced. If the MARR is 10%, which alternative should be selected (a) Based on the payback period? (b) Based on benefit-cost ratio analysis?
9-54 Three mutually exclusive alternatives are beine A considered: $500 $400 $300 200 100 Initial cost Benefit at end of the first 200 200 year Uniform benefit at end of 100 125 subsequent years Useful life, in years 4 At the end of its useful life, an alternative is not replaced. If the MARR is 10%, which alternative should be selected (a) Based on the payback period? (b) Based on benefit-cost ratio analysis?
9-54 Three mutually exclusive alternatives are beine...
Three mutually exclusive alternatives are being considered: Initial cost Benefit at end of the first $500 $400 $300 200 200 200 year Uniform benefit at end of 100 125 100 subsequent years Useful life, in years 4 At the end of its useful life, an alternative is not replaced. If the MARR is 10%, which alternative should be selected (a) Based on the payback period? (b) Based on benefit-cost ratio analysis?
Need cash flow diagram
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please show excel formulas so I can understand the problem
thanks
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