An alternative with an infinite life has a modified B/C ratio of - 100 The alternative has benefits of $185,000 per year and annual maintenance costs of $35,000 per year. Which one of the following values is closest to the first cost of the alternative at an interest rate of 8% per year? Select one: O a. 2,380,777 O b.2,347,908 о с.2,310,924 d. 1,505,777 e. 1,575,630

An alternative with an infinite life has a modified B/C ratio of - 100 The alternative has benefits of $185,000 per year and annual maintenance costs of $35,000 per year. Which one of the following values is closest to the first cost of the alternative at an interest rate of 8% per year? Select one: O a. 2,380,777 O b.2,347,908 о с.2,310,924 d. 1,505,777 e. 1,575,630

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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A firm is considering two alternatives that have no salvage value. At the end of 4 years, another B may be purchased with the same cost, benefits and so forth. a. Construct a choice table for interest rates from 0% to 100%. b. If the MARR is 10%, which alternative should be selected? Item Initial Cost Uniform Annual Benefits Useful Life, in years A -$10,700 2,100 8 B -$5,500 1,800 4
Two alternatives are being considered: B First cost Uniform annual benefit Useful life, in 5000 9600 1750 1850 4 8 years If the minimum attractive rate of return is 7%, which alternative should be selected? Solution: 1. Use the increment analysis, we should use 2. Terms n= 3. The Increment CFD has 3 basic patterns: O AP= O AA= O AF= occurred at end of year 4. AROR= % 5. Choose Please answer all parts of the question.
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Data for 2 alternatives are given below, determine the cost of alternative B so that the two alternatives will be equally desirable. Assume an interest rate of 15%. Use benefit cost ratio analysis Alternatives A Cost Salvage Value Annual Benefit Life (years) B P100k X 10k 16k 28k 30k 10 12
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Given the financial data in the table below for two mutually exclusive alternatives, determine the value "X" for the two alternatives to be equally attractive. Use an interest rate of 12% per year. Q Initial cost $2,500 $4,000 Annual benefit 400 Life
1
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4. If the terminal balance of a 5-year project at 10% s0 then which one below is true? A. The IRR of the project is less than 10% B. The future worth of the project is greater than 0 C. Discounted payback perlod is 5 years OD. The present worth of the project is less than 0 5 In an incremental IRR analysis, which analysis period should be used to compare 2 mutually altemative projects with 3 and 4 years of useful lives? (Assume an indefinite analynis perlod and that the projects are repeatable) O A. B years O B. 12 years OC. 4 years D. 3 years
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