Alternative 1 : 0-year : -154650 , 1-year: 77325 , 2-year: 61860 , 3-year: 30930 , 4-year: 46395 , 5-year: 15465 Alternative 2 : 0-year: -92790 , 1-year: 61860 , 2-year: 46395 , 3-year: -6186 , 4-year: 30930 Q2)A contractor would like to buy a second-hand loader to be used on the construction site. The contractorcannot make the final decision and eliminate the other altematives except for two of them given inFigure 1.The costs and profits used for these alternatives are assigned based on the ID umber; the related valuesgiven in Table 3 have to be used. Negative values on the table indicate the cost, and the positive valuesindicate the profits.You should solve the problem for yearly interest rate, i=12%.a) Determine the best option regarding the discounted payback period analysis. Write the differencebetween payback period analysis and discounted payback period analysis? Which one is giving a moreaccurate estimate? Briefly explain it.b) Determine the best option regarding the present worth analysis.c) What is the final decision between these two altematives? Explain your ideas on it.Alternative 1: JCB1-Year2-Year4-Year3-Year5-Ҳear12450-YearAlternative 2: Hidromek1-Year2-Year4-Year2343-Year0-YearFigure 1. Cash flow diagrams of two alternatives3.

Solution : In the given scenario, we will be using NPV to make the final decision between the…

A contractor would like to buy a second-hand loader to be used on the construction site. The contractor cannot make the final decision and eliminate the other altematives except for two of them gien in Figure 1.

A contractor would like to buy a second-hand loader to be used on the construction site. The contractor cannot make the final decision and eliminate the other altematives except for two of them gien in Figure 1.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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