Alfredo Auto Parts is considering investing in a new forming line for grille assemblies. For a five-year study period, the cash flows for two separate designs are shown below. Create a spreadsheet that will calculate the present worths for each project for a variable ALARR. Through trial and error, establish the ALARR at which the present worths of the two projects are exactly the same. Cash Flows for Grille Assembly Project Automated Line Manual Line Disburse- Net Cash Disburse- Net Cash Year Receipts Flow Receipts Flow ments ments €1 500 000 € 0 -€1 500 000 €1 000 000 € 0-€1 000 000 1 50 000 300 000 250 000 20 000 200 000 180 000 60 000 300 000 240 000 25 000 200 000 175 000 3 70 000 300 000 230 000 30 000 200 000 170 000 4 80 000 300 000 220 000 35 000 200 000 165 000 90 000 800 000 710 000 40 000 200 000 160 000 2.
Alfredo Auto Parts is considering investing in a new forming line for grille assemblies. For a five-year study period, the cash flows for two separate designs are shown below. Create a spreadsheet that will calculate the present worths for each project for a variable ALARR. Through trial and error, establish the ALARR at which the present worths of the two projects are exactly the same. Cash Flows for Grille Assembly Project Automated Line Manual Line Disburse- Net Cash Disburse- Net Cash Year Receipts Flow Receipts Flow ments ments €1 500 000 € 0 -€1 500 000 €1 000 000 € 0-€1 000 000 1 50 000 300 000 250 000 20 000 200 000 180 000 60 000 300 000 240 000 25 000 200 000 175 000 3 70 000 300 000 230 000 30 000 200 000 170 000 4 80 000 300 000 220 000 35 000 200 000 165 000 90 000 800 000 710 000 40 000 200 000 160 000 2.
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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Alfredo Auto Parts is considering investing in a new forming line for grille assemblies. For a five-year study period, the cash flows for two separate designs are shown below. Create a spreadsheet that will calculate the present worths for each project for a variable ALARR. Through trial and error, establish the ALARR at which the present worths of the two projects are exactly the same. Cash Flows for Grille Assembly Project Automated Line Manual Line Disburse- Net Cash | Disburse- Net Cash Year | ments | Receipts | Flow ments | Receipts Flow 0 [e1 500000 [€ 0 [-€1 500 000 [€1 000 000 | € o[ -€1 000 000 1 50 000 | 300 000 250000 [ 20000 [ 200 000 180 000 2 60 000 | 300 000 240000 [ 25000 [ 200 000 175 000 3 70 000 | 300 000 230 000 30 000 | 200 000 170 000 4 80000 [ 300 000 220 000 35000 | 200 000 165 000 5 90 000 [ 800 000 710000 40000 [ 200 000 160 000
Transcribed Image Text:Alfredo Auto Parts is considering investing in a new forming line for grille assemblies. For a five-year study period, the cash flows for two
separate designs are shown below. Create a spreadsheet that will calculate the present worths for each project for a variable ALARR. Through
trial and error, establish the ALARR at which the present worths of the two projects are exactly the same.
Cash Flows for Grille Assembly Project
Automated Line
Manual Line
Disburse-
Net Cash
Disburse-
Net Cash
Year
ments
Receipts
Flow
ments
Receipts
Flow
|€1 500 000 €
0-€1 500 000 €1 000 000 € 0 -€1 000 000
1
50 000 300 000
250 000
20 000 200 000
180 000
2
60 000
300 000
240 000
25 000
200 000
175 000
3
70 000
300 000
230 000
30 000
200 000
170 000
4
80 000
300 000
220 000
35 000
200 000
165 000
5
90 000
800 000
710 000
40 000
200 000
160 000
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