1. A firm is considering two alternatives that have no salvage value. A B Initial Cost $10,700 $5,500 Uniform Annual 2,100 1,800 Benefits Useful Life, in 8 4 years At the end of 4 years, another B may be purchased with the same cost, benefit and so forth. 1. Graph the EUAC or EUAW for the alternatives. Construct a choice table for interest rates from 0% to 100%. 2. If the MARR is 10%, which alternative should be selected?

1. A firm is considering two alternatives that have no salvage value. A B Initial Cost $10,700 $5,500 Uniform Annual 2,100 1,800 Benefits Useful Life, in 8 4 years At the end of 4 years, another B may be purchased with the same cost, benefit and so forth. 1. Graph the EUAC or EUAW for the alternatives. Construct a choice table for interest rates from 0% to 100%. 2. If the MARR is 10%, which alternative should be selected?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Salalah Wind Energy has taken up a new project with an initial investment of 50000 OMR.The expected future cashflow from the project over the next three years will be 22500 OMR, 23500 OMR and 24500 OMR.What is the profitability index if the discount rate is 7 percent? Select one: a. 1.48 b. 1.44 c. 1.63 d. 1.23 e. None of these
Compare alternatives A and B with the present worth method if the MARR is 14% per year. Which one would you recommend? Assume repeatability and a study period of 16 years. Capital Investment Operating Costs The PW of Alternative A is $ - 108236. (Round to the nearest dollar.) The PW of Alternative B is $ -95429. (Round to the nearest dollar.) Alternative B should be selected. A $55,000 $6,000 at end of year 1 and increasing by $600 per year thereafter $6,000 every 4 years 16 years $12,000 if just overhauled Overhaul Costs Life Salvage Value Click the icon to view the interest and annuity table for discrete compounding when the MARR is 14% per year. B $15,000 $12,000 at end of year 1 and increasing by $1,200 per year thereafter None 8 years negligible D
Alonso Yards Corp. is considering an investment opportunity with the following expected net cash inflows: Alonso Yards Corp. Year 1 $203,000 Year 2 $185,000 Year 3 $106,000 The company uses a discount rate of 9%, and the initial investment of $380,000. Calculate the NPV of the investment.
3. An investor plans to buy a property. She has two options for loans: (1) Loan balance=10, maturity=10 years, interest rate=1%; (2) Loan balance=20, maturity=10 years, interest rate=2%. The incremental (or marginal) borrowing cost by choosing the option (2), instead of the option (1), is approximately x%. Calculate the value of x.
Please don't uses excel. Please
Consider the following information relating to the expected cash flows from two independent projects. The cash flows are expressed in real terms, the nominal discount rate is 10% p.a. and the expected inflation rate is 4% p.a. Time 0 1 2 3 4 5 6 Project 1 -$200,000 $50,000 $50,000 $50,000 $50,000 $50,000 Project 2 -$250,000 $65,000 $65,000 $65,000 $65,000 $65,000 $65,000 a) Calculate the NPV of each of the projects b) In no more than 6 lines, explain which of the above projects you should select and why?
A firm is considering two alternatives that have no salvage value. At the end of 4 years, another B may be purchased with the same cost, benefits and so forth. a. Construct a choice table for interest rates from 0% to 100%. b. If the MARR is 10%, which alternative should be selected? Item Initial Cost Uniform Annual Benefits Useful Life, in years A -$10,700 2,100 8 B -$5,500 1,800 4
Two alternatives are being considered: B First cost Uniform annual benefit Useful life, in 5000 9600 1750 1850 4 8 years If the minimum attractive rate of return is 7%, which alternative should be selected? Solution: 1. Use the increment analysis, we should use 2. Terms n= 3. The Increment CFD has 3 basic patterns: O AP= O AA= O AF= occurred at end of year 4. AROR= % 5. Choose Please answer all parts of the question.
Use a calculator to evaluate the amortization formula for the values of the variables P, r, and t (respectively). Assume n = 12. (Round your answer to the nearest cent.) $150,000; 9%; 25 yr
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A project has a NPV of +60,000 dollars at the interest rate of 8%. A NPV of -30,000 dollars is realised at an interest rate of 10%. What is the IRR when calculated using the linear interpolation method? Select the best answer from the options listed below. 9.33% b. 8.67% 9% d. 9.67% a. C.

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