Question

1) Determine the P.W and A.E values for the life of the project shown below (N = 20). Would you consider investing in this Business startup? (Please note in addition to the positive flows, you have three negative flows occurring at N = 7,8,9) (i =5%) $4,800 $1,000 0 20 1 $22,000 $400 2) What would happen to the P.W of the problem explained above, if the machine that was initially bought for $22,000 could be salvaged at the end of the project's life (N= 20) with the following outcomes and possibilities: (i = 5%) Probability of happening Salvage value Outcome 50% $2,400 $3,200 2 50%

Answer 1

Answes fuon at the valu the lite the p.w and A.E TIojeut shaas below (N-20) osltive flows ou haus Tyto0tPP ocutiong at three nega live flow s Anceuairg Cash flouws trom ur to ur 20 are arttame c poqrenton s 1000 003h Q20 aJtq d 19d 3800 2oo

au 1000 a 1200 C3 400 ay 1600 Coste 4800 -- + 90h t 1900 062 l05 06 -22000 105 l-05 -y00 (2.03a) 32159 89- R 2 000 - oo ( 2-031) 015.89 u Aw hustment (PIA 5./20) 9344.05 2.4622 750 0321 - 50.03 2 |

Huon that () the machine that 81 wa In Could be Sal ueage d at the En d 1000 the hojeed ste twhere.N20) td-th lollan outcomes pols -51) Pobalhotyg hang Salage al OutCome 21400 50l 3 200 Saluage volue pora me leol modifiee below Due to NPu pu Benefus- Pw Costs neus ooo + (200 1400 4800 05 058 050 o 5C3200) to 5 (2400) 05 22000

32159 89 lo 55 30 22000 400(2.032) 10402 39 saluagy added notameu Ex0cted Duo to NPu has Incieased tsom 9 347.05 vauo new loy02.39 the to