Homework Answers
NPW analysis will be done for 12 yrs (LCM of 2, 3 & 4)
NPW of A = -10000 + 6000 * (P/A, 10%, 12) - (10000 - 1000)*((P/F,10%,2) + (P/F,10%,4) + (P/F,10%,6) + (P/F,10%,8) + (P/F,10%,10)) + 1000 * (P/F,10%,12)
= -10000 + 6000 *6.813693 - 9000*(0.826446 + 0.683013 + 0.564474 + 0.466507 + 0.385543) + 1000 *0.318631
= 4866.94
NPW of B = -15000 + 10000 * (P/A, 10%, 12) - (15000 + 2000)*((P/F,10%,3) + (P/F,10%,6) + (P/F,10%,9)) - 2000 * (P/F,10%,12)
= -15000 + 10000 *6.813693 - 17000*(0.751315 + 0.564474 + 0.424098) - 2000 * 0.318631
= 22921.59
NPW of C = -12000 + 5000 * (P/A, 10%, 12) - (12000 - 3000)*((P/F,10%,4) + (P/F,10%,8)) + 3000 * (P/F,10%,12)
= -12000 + 5000 *6.813693 - 9000*(0.683013 + 0.466507) + 3000 * 0.318631
= 12678.68
As NPW of B is highest, it should be selected
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show me through an equation please. thank you.
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