Question

The product development group of a high-tech electronics company developed five proposals for new products. The company wants to expand its product offerings, so it will undertake all projects that are economically attractive at the company's MARR of 20% per year. The cash flows (in $1000 units) associated with each project are estimated. Which projects, if any, should the company accept on the basis of a present worth analysis? Project A B с D Initial Investment $-400 $-510 $ 550 $820 Operating cost, per Year $-100 $-100 $-260 $-310 Revenue, per Year $325 $250 $575 $625 Salvage Value $0 $22 $0 $30 Life 5 years 8 years The present worth of project Ais S The present worth of project Bis The present worth of project is $ The present worth of project Diss The present worth of project is $ $-1250 $ 410 $775 $130 4 years 3 years 10 years Project A is Click to select) Project Bis Click to select : Project Cis Click to select) Project Dis Click to select : Project E is Click to see!

Answer 1

Answer is as follows: Present Worth : Present worth of cash inflows (PW) Present worth of cash outflows If PW is positive, we can accept the project otherwise we can reject if pw is negative 1. Present Worth of Project- A: = $3:25 -100]x PVAF[2016, 3yrs) - $400 ||225x 2-1065) - $400 $74

2. Present Worth of project-B; - 820 : (250-100)x PVAF(20),10yos ) + 22 XPVF(20%, so you) $510 = (150 X 241925)+(22x0-1615) - 510 $12a 3. Present worth of Project-c: (575-260)x PVAF(20/95you) - 550 (315% 2.9906)-550 $392 2. Present worth of Project-D: = (625-310)x PvAF(20%, 8y+8)+ 30% PVF (20), @yos) (15*3.8372)+(30X0.2326) -820 - $396 5. Present worth of Project-E: - 675-410)x PVA F(206,4403) + 130XPVF(2018,44) - $1250 = (365x2,588+(3070-48239-1950 z-$242 = ($243) Accept Coo) Reject → Accept → Accept → Accept Reject А B В → Accept D