Just Answer NPW for Proj A Consider the two mutually exclusive service projects in the table below. What should be thecommon analysis period if your decision will be based on NPW and on the least common multipleanalysis method?123A-$22,000$17,500$17,000$15,000B-$27,000$20,500$28,000 Determine the NPW of project A for the common analysis period (as identified in question#1). Assumean annual interest rate of 16% (compounded annually).

Answered: Determine the NPW of project A for the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Just Answer NPW for Proj A

Consider the two mutually exclusive service projects in the table below. What should be the
common analysis period if your decision will be based on NPW and on the least common multiple
analysis method?
1
2
3
A
-$22,000
$17,500
$17,000
$15,000
B
-$27,000
$20,500
$28,000

Determine the NPW of project A for the common analysis period (as identified in question#1). Assume
an annual interest rate of 16% (compounded annually).

Expert Solution

Step 1

The present worth of a project or an investment refers to its current value in accordance with its value in the future on the basis of a certain rate of return. The net present worth refers to the excess present worth of benefits over the present worth of cost.
The common analysis period method of net present worth refers to the estimation of the net present worth for two or more projects or investments for the least common multiple of their lives.

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