Question

Open Books&Ntes listed below, with interest of 8%, which tractor would be Type B 10,000 200 1,000 5,000 15 it Use AW-CR+A of AOC, Make sure about inflow and outflow of cash flow 1, what is the value of(AP, 8%, 5) fictor? (Select the closet number) a 0.17046 h 0.25046 c 3.99271 d. 586660 2. what is the value of(AF, 8%, 15) factor? (Select the closet number) a 003683 b. 0.11683 c8.55948 d 27.15211 3. What is the equivalent annual worth of the Type A tractor? (Select the closest number) a $550.24 b. -$650.24 c $1,650.02 d. $1854.58 4. What is the equivalent annual worth of the Type B tractor? (Select the closest number) a. -$931.47 b.-$1,005.13 c. -$1,331.47 d. -$1,405.13 5. Which altenative should be selected? a. Type A tractor b. Type B tractor

Answer 1

1. $\LARGE (A/P,8\%,5) = \frac{0.08}{1-\frac{1}{1.08^5}}$

On solving above equation we get

(A/P,8%,5) = 0.25046

Option B.

2. $\LARGE (A/F,8\%,15) = \frac{0.08}{1.08^{15}-1}$

On solving above equation we get

$\LARGE (A/F,8\%,15) = 0.036829 \approx 0.03683$

Option A.

3. AW can be calculated using the following formula

$\LARGE AW = -I(A/P,i\%,n)- M +S(A/F,i\%,n)$

AW of tractor A

I = 5000, M =500, S = 600, n = 5, i=8%

$\LARGE AW_A = -5000(A/P,8\%,5)- 500 +600(A/F,8\%,5)$

$\LARGE AW_A = -5000*0.25046- 500 +600*0.17046$

AW_A = - $ 1650.02

Option C.

4. AW of tractor B

$\LARGE AW = -10000(A/P,8\%,15)- 200+1000(A/F,8\%,15)$

$\LARGE AW = -10000*0.116829- 200+1000*0.03683$

$\LARGE AW_B = -1168.29- 200+36.83$

AW = - $ 1331.46

Option C.

5. Select tractor B. Since it's aw is low.

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