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Alterna Annual Alternative A Annual Expenses FYear Estimated in Estimat Actual Dollars Real Do base ye

Alterna Annual Alternative A Annual Expenses FYear Estimated in Estimat Actual Dollars Real Do base ye

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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Annual expenses for two alternatives have been estimated on different bases as follows: Alternative A Alternative B Annual Expenses Annual Expenses Estimated in End of Year Fstimated in Real Dollars with Actual Dollars base year = 0 11500 13700 2. 11700 14800 3 11300 14200 4 10700 13500 If the average general price inflation rate is expected to be 0.08 per year and the real minimum acceptable rate of interest is 0.13 per year, calculate: show which alternative has the least negative equivalent worth in the base period? Actual MARR = Present Worth (A) = Present Worth (B) = Which alternative is better? 1 for alternative A 2 for alternative B
Transcribed Image Text:Annual expenses for two alternatives have been estimated on different bases as follows: Alternative A Alternative B Annual Expenses Annual Expenses Estimated in End of Year Fstimated in Real Dollars with Actual Dollars base year = 0 11500 13700 2. 11700 14800 3 11300 14200 4 10700 13500 If the average general price inflation rate is expected to be 0.08 per year and the real minimum acceptable rate of interest is 0.13 per year, calculate: show which alternative has the least negative equivalent worth in the base period? Actual MARR = Present Worth (A) = Present Worth (B) = Which alternative is better? 1 for alternative A 2 for alternative B
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