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Alpha's Net Future Worth (NFW) at EOY5. Beta's Net Present (NPW) at EOYO. 3. Gamma's NFW at EOY5. 1. 2.

Alpha's Net Future Worth (NFW) at EOY5. Beta's Net Present (NPW) at EOYO. 3. Gamma's NFW at EOY5. 1. 2.

Essentials Of Investments
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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Please answer questions 1-10 using the table provided. Thank you.

1. Alpha's Net Future Worth (NFW) at EOY5. 2. Beta's Net Present (NPW) at EOYO. 3. Gamma's NFW at EOY5. 4. Beta's Annual Equivalent Worth (AEW). 5. Alpha's AEW over 30 years (it was repeated several times without changes to its initial parameter values). 6. The best of the three (3) harvesters based on the NFW decision criterion. 7. The best of the three (3) harvesters based on the AEW decision criterion. 8. Beta's recovery period (years) based on the simple payback decision criterion. 9. Gamma's "project balance" at EOY2 using the simple payback decision criterion. 10. Alpha's "project balance" at EOY3 using the discounted payback decision criterion.
Transcribed Image Text:1. Alpha's Net Future Worth (NFW) at EOY5. 2. Beta's Net Present (NPW) at EOYO. 3. Gamma's NFW at EOY5. 4. Beta's Annual Equivalent Worth (AEW). 5. Alpha's AEW over 30 years (it was repeated several times without changes to its initial parameter values). 6. The best of the three (3) harvesters based on the NFW decision criterion. 7. The best of the three (3) harvesters based on the AEW decision criterion. 8. Beta's recovery period (years) based on the simple payback decision criterion. 9. Gamma's "project balance" at EOY2 using the simple payback decision criterion. 10. Alpha's "project balance" at EOY3 using the discounted payback decision criterion.
A cash crop specialist requires more significant harvesting capacity due to the purchase of an additional 900 acres of farmland. The parameter values of the three harvesters under consideration are provided below. Parameters 1. Initial Cost ($) Alpha 300,000 Beta 350,000 200,000 at ΕΟΥ1 increasing by $500 annually thereafter by $500 until EOY5; 206,000 at EOY6 increasing annually thereafter by 1% 113,000 at Gamma 390,000 205,000 at ΕΟΥ1 235,000 annually from EOY1 to increasing annually thereafter by $500 2. Revenues ($) EOY5 110,000 at ΕΟΥ1 increasing annually thereafter by 2% 115,000 at EOY1 increasing annually thereafter by 2% ΕΟΥ1 3. Operating costs ($) increasing annually thereafter by 4% 4. End-of-life salvage value ($) 5. Useful life 10,000 -10,000 10 5 (years) • All parameter values are fictitious. • EOY = End-of-year Industry standard for harvesters = 4 years MARR = 10%
Transcribed Image Text:A cash crop specialist requires more significant harvesting capacity due to the purchase of an additional 900 acres of farmland. The parameter values of the three harvesters under consideration are provided below. Parameters 1. Initial Cost ($) Alpha 300,000 Beta 350,000 200,000 at ΕΟΥ1 increasing by $500 annually thereafter by $500 until EOY5; 206,000 at EOY6 increasing annually thereafter by 1% 113,000 at Gamma 390,000 205,000 at ΕΟΥ1 235,000 annually from EOY1 to increasing annually thereafter by $500 2. Revenues ($) EOY5 110,000 at ΕΟΥ1 increasing annually thereafter by 2% 115,000 at EOY1 increasing annually thereafter by 2% ΕΟΥ1 3. Operating costs ($) increasing annually thereafter by 4% 4. End-of-life salvage value ($) 5. Useful life 10,000 -10,000 10 5 (years) • All parameter values are fictitious. • EOY = End-of-year Industry standard for harvesters = 4 years MARR = 10%
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