Homework Answers
| Year | P | Q | R | Discouting factor @ 8% | PV of P | PV of Q | PV of R |
| 0 | -5000 | -1000 | -2500 | 1 | -5000 | -1000 | -2500 |
| 1 | 650 | 250 | 450 | 0.925925926 | 601.8518519 | 231.4814815 | 416.6667 |
| 2 | 650 | 250 | 450 | 0.85733882 | 557.2702332 | 214.3347051 | 385.8025 |
| 3 | 650 | 250 | 450 | 0.793832241 | 515.9909567 | 198.4580603 | 357.2245 |
| 4 | 650 | 250 | 450 | 0.735029853 | 477.7694043 | 183.7574632 | 330.7634 |
| 5 | 650 | 250 | 450 | 0.680583197 | 442.3790781 | 170.1457993 | 306.2624 |
| 6 | 650 | 250 | 450 | 0.630169627 | 409.6102575 | 157.5424067 | 283.5763 |
| 7 | 650 | 250 | 450 | 0.583490395 | 379.2687569 | 145.8725988 | 262.5707 |
| 8 | 650 | 250 | 450 | 0.540268885 | 351.1747749 | 135.0672211 | 243.121 |
| 9 | 650 | 250 | 450 | 0.500248967 | 325.1618286 | 125.0622418 | 225.112 |
| 10 | 650 | 250 | 450 | 0.463193488 | 301.0757673 | 115.798372 | 208.4371 |
| Total | -638.4470907 | 677.5203497 | 519.5366 | ||||
EUAW Calculation
PVAF = 1 - (1+0.08)^-10 / 0.08 = 6.710081399
Alternative P = -638.4470907 / 6.710081399 = - $95.14744
Q= 677.5203497 / 6.710081399 = $100.9705113
R = 519.5366 / 6.710081399 = $77.42628
Therefore best choice is alternative Q
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