3. [2 points] The cash flows for two investment projects are given in the below table. Project's Cash Flow ($) n A B 0 -4,500 6,500 1 1,000 -1,400 2 X -1,400 3 1,000 -1,400 4 1,000 -1,400 (a) For Project A, find the value of X that makes the equivalent annual receipts equal the equivalent annual disbursement at i = 15%. (b) For Project A to be preferred over Project B, determine the minimum acceptable value of X in year 2 at i =12% based on an AE criterion. Luces for its current mass-
3. [2 points] The cash flows for two investment projects are given in the below table. Project's Cash Flow ($) n A B 0 -4,500 6,500 1 1,000 -1,400 2 X -1,400 3 1,000 -1,400 4 1,000 -1,400 (a) For Project A, find the value of X that makes the equivalent annual receipts equal the equivalent annual disbursement at i = 15%. (b) For Project A to be preferred over Project B, determine the minimum acceptable value of X in year 2 at i =12% based on an AE criterion. Luces for its current mass-
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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![3. [2 points] The cash flows for two investment projects are given in the below table.
Project's Cash Flow ($)
n
A
B
0
-4,500
6,500
1
1,000
-1,400
2
X
-1,400
3
1,000
-1,400
4
1,000
-1,400
(a) For Project A, find the value of X that makes the equivalent annual receipts equal
the equivalent annual disbursement at i = 15%.
(b) For Project A to be preferred over Project B, determine the minimum acceptable
value of X in year 2 at i =12% based on an AE criterion.
Luces for its current mass-](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F16c64dd0-7022-4f05-9acf-5c6a7ca68d90%2F606f4b55-62dd-4e74-8f9d-1533afae1500%2Fpxr1ye1_processed.jpeg&w=3840&q=75)
Transcribed Image Text:3. [2 points] The cash flows for two investment projects are given in the below table.
Project's Cash Flow ($)
n
A
B
0
-4,500
6,500
1
1,000
-1,400
2
X
-1,400
3
1,000
-1,400
4
1,000
-1,400
(a) For Project A, find the value of X that makes the equivalent annual receipts equal
the equivalent annual disbursement at i = 15%.
(b) For Project A to be preferred over Project B, determine the minimum acceptable
value of X in year 2 at i =12% based on an AE criterion.
Luces for its current mass-
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