Evaluate the following alternatives through the VPN, VAUE and IRR of the best option. To evaluate the alternatives, consider 6.35% inflation, 2.5% liability rate (risk premium) and x% profit assigned according to the agenda (data to calculate the TMAR). Option A It consists of an investment of Q250,000, to obtain income during the 10 years of useful life for Q100,000 / year, increasing 15% each year the income is interrupted in the last 2 years. The operating costs are of Q15,000 per year Option B Q250,000 must be invested. The investment lasts 4 years and has operating expenses of Q100,000 / year, increasing Q15,000 each year. There is a single salvage value of Q600,000 at the end of the useful life. Option C Q300,000 is invested for advertising expenses, in addition, Q100,000 / year must be given for five years of investment. Income is reported of Q200,000 per year with a salvage value of Q500,000 at the end of the investment.
Evaluate the following alternatives through the VPN, VAUE and IRR of the best option. To evaluate the alternatives, consider 6.35% inflation, 2.5% liability rate (risk premium) and x% profit assigned according to the agenda (data to calculate the TMAR). Option A It consists of an investment of Q250,000, to obtain income during the 10 years of useful life for Q100,000 / year, increasing 15% each year the income is interrupted in the last 2 years. The operating costs are of Q15,000 per year Option B Q250,000 must be invested. The investment lasts 4 years and has operating expenses of Q100,000 / year, increasing Q15,000 each year. There is a single salvage value of Q600,000 at the end of the useful life. Option C Q300,000 is invested for advertising expenses, in addition, Q100,000 / year must be given for five years of investment. Income is reported of Q200,000 per year with a salvage value of Q500,000 at the end of the investment.
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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Transcribed Image Text:Evaluate the following alternatives through the VPN, VAUE and IRR of
the best option. To evaluate the alternatives, consider 6.35% inflation,
2.5% liability rate (risk premium) and x% profit assigned according to
the agenda (data to calculate the TMAR).
Option A
It consists of an investment of Q250,000, to obtain income during the
10 years of useful life for Q100,000 / year, increasing 15% each year
the income is interrupted in the last 2 years. The operating costs are
of Q15,000 per year
Option B
Q250,000 must be invested. The investment lasts 4 years and has
operating expenses of Q100,000 / year, increasing Q15,000 each year.
There is a single salvage value of Q600,000 at the end of the useful
life.
Option C
Q300,000 is invested for advertising expenses, in addition, Q100,000 /
year must be given for five years of investment. Income is reported of
Q200,000 per year with a salvage value of Q500,000 at the end of the
investment.
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