Question

Consider the independent investment projects in the table below. Compute the project worth of each project at the end of six years with variable MARRs as follows: 10% for n = 0 to n= 3 and 15% for n = 4 to n=6. B Click the icon to view the information about the independent investment projects. Click the icon to view the interest factors for discrete compounding when MARR = 10% per year. Click the icon to view the interest factors for discrete compounding when MARR = 15% per year. Project A worth at the end of six years will be $ - (Round to the nearest cent.)

Answer 1

Present worth of project A = - $ 800 + $ 150 $\times$ (P/F, 10%, 1 year) + $ 150 $\times$ (P/F, 10%, 2 year) + $ 350 $\times$ (P/F, 10%, 3 year) - $ 200 $\times$ (P/F, 15%, 4 year) + $ 500 $\times$ (P/F, 15%, 5 year) + $ 400 $\times$ (P/F, 15%, 6 year)

Present worth of project A = - $ 800 + $ 150 $\times$ 0.9091 + $ 150 $\times$ 0.8264 + $ 350 $\times$ 0.7513 - $ 200 $\times$ 0.5718 + $ 500 $\times$ 0.4972 + $ 400 $\times$ 0.4323

Project A worth at the end of 6 years will be $ 30.44

----------------------------------------------------------------------------------

Present worth of project B = - $ 500 + $ 150 $\times$ ( P/A, 10%, 3 years) + $ 100 $\times$ (P/F, 15%, 4 years) + $ 100  $\times$ ( P/F, 15%, 5 years)

Present worth of project B = - $ 500 + $ 150 $\times$ 2.4869 + $ 100 $\times$ 0.5718 + $ 100 $\times$ 0.4972

Project B worth at the end of 5 years will be $ - 20.07

--------------------------------------------------------------------------------

Present worth of project C = $ 200 - $ 40 $\times$ ( P/F, 10%, 1 year) - $ 60 $\times$ (P/F, 10%, 2 years) - $ 140 $\times$ (P/F, 10%, 3 years)

Present worth of project C = $ 200 - $ 40 $\times$ 0.9091 - $ 60 $\times$ 0.8264 - $ 140 $\times$ 0.7513

Project C worth at the end of 3 years will be $ 8.87