Homework Answers
Alternative A.
Payback period = 11000/3500 = 3.142
. Net present worth = -11000*1.04^5 +3500(F/A,4%,5)
= $ 5,573.94
Alternative B.
Payback period = 23000/6600 = 3.48 years
Net future worth = - 23000*1.04^5 + 6600*(1.04^5 -0.04×5-1)/(0.04) = $ 7764.21
Alternative C
Payback period = 20000/5500 = 3.64
Net FW = -20000×1.04^5 + 5500(F/A,4%,5)
FW = $ 5,456.71
Option B has highest FW thus select B.
On the basis of Payback period alternative A is better.
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Problems 4 The cash flows for three mutually exclusive alternatives are given in table below use...
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USE
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international genetic technologies inc. (InGen) is examining
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3) Using benefit-cost ratio analysis, a 10-year useful life and a MARR of 25%, determine which of the following mutually exclusive models should be selected. А в C D E Initial Cost $100 $200 $300 $400 $500 $37 $60 $83 $137 $150 Annual Benefits 4) A big box company is using a benefit-cost ratio analysis to select which one of the 3 alternatives shown below should be...
Three mutually exclusive design alternatives are being considered. The estimated cash flows for each alternative are given next. The MARR is 20% per year. At the conclusion of the useful life, the investment will be sold. B Investment cost Annual expenses Annual revenues Market value Useful life $28,000 $15,000 $23,000 $6,000 10 years 10 years 10 years 26.4% $55,000 $40,000 $22,000 $32,000 $10,000 $13,000 $28,000 $8,000 24.7% 22.4% IRR A decision-maker can select one of these alternatives or decide to...
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9-54 Three mutually exclusive alternatives are beine...
USE
ANNUAL WORTH Analysis
Two mutually exclusive design alternatives are being considered. The estimated cash flows for each alternative are given in the following table with MARR = 10% per year. Suggest your recommendation by using multiple attribute annual worth AW analysis. Design A Design B Investment cost (RM) 28,000 55,000 One-off expenses 10,000 13,000 In year 4 (RM) Annual revenues (RM) 22,000 28,000 Market value (RM) 6,000 8,000 Useful life 10 years 6 years
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