3. The cash flows for three different alternatives are given in table below. If MARR is set at 8%, use incremental analysis between (Y and Z), (Y and X) to determine which is the best alternative? Data Alt. X Alt. Y Alt. Z Initial Cost, S Net Benefits/ Year, S 528 Life, Years 12,500 7,500 1,063 9,000 510 25 25 25

3. The cash flows for three different alternatives are given in table below. If MARR is set at 8%, use incremental analysis between (Y and Z), (Y and X) to determine which is the best alternative? Data Alt. X Alt. Y Alt. Z Initial Cost, S Net Benefits/ Year, S 528 Life, Years 12,500 7,500 1,063 9,000 510 25 25 25

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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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

3. The cash flows for three different alternatives are given in table below. If
MARR is set at 8%, use incremental analysis between (Y and Z), (Y and X) to
determine which is the best alternative?
Data
Alt. X Alt. Y Alt. Z
Initial Cost, S
Net Benefits/ Year, S 528
Life, Years
12,500 7,500
1,063
25
9,000
510
25
25

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1. Discounted Payback (DCPB) and IRR analysis. Use the cash flow situation (table below) to answer. a. Determine the DCPB based on a MARR rate of 8.0% b. Determine the IRR Year Cash Flow (in $1000's) 0 1 -5500 +1500 2 +1800 3 +1500 4 +1800 5 6 +1500 +1800 7 +1500
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) Assuming a 9% cost of capital, find the modified internal rate of return for the following cash flows: a. 19.78% b. 6.95% c. 13.64% d. 7.86% Year Cash Flow 0 1 2 3 -$175 $167 $240 -$120
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