(a)Based on the payback period, which alternative is preferred? (b)Based on future worth analysis, which of the four alternatives is preferred at 5% interest? (c)Based on future worth analysis, which alternative is preferred at 20% interest
(a)Based on the payback period, which alternative is preferred? (b)Based on future worth analysis, which of the four alternatives is preferred at 5% interest? (c)Based on future worth analysis, which alternative is preferred at 20% interest
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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| Year | E | F | G | H |
| 0 | − $90 | − $110 | − $100 | − $120 |
| 1 | 20 | 35 | 0 | 0 |
| 2 | 20 | 35 | 10 | 0 |
| 3 | 20 | 35 | 20 | 0 |
| 4 | 20 | 35 | 30 | 0 |
| 5 | 20 | 0 | 40 | 0 |
| 6 | 20 | 0 | 50 | 180 |
(a)Based on the payback period, which alternative is preferred?
(b)Based on future worth analysis, which of the four alternatives is preferred at 5% interest?
(c)Based on future worth analysis, which alternative is preferred at 20% interest?
(d)At 10% interest, what is the benefit–cost ratio for Alt. G?
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