Given the following data, use present worth analysis to find the better alternative, A or B.Use an analysis period of 12 years and 12% annual interest rate.ABInitial cost9,01014,542Annual benefit5,6279,399Salvage value1,247-2,4306 years4 yearsUseful lifeWhat is the difference between the present worth of alternative B and A, specificallywhat is PWB-PWA? State your answer with 2 decimal places

The problem pertains to present worth analysis. Present Worth Analysis, also referred to as Net…

Answered: Given the following data, use present…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 2QTD

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Which net present value, payback period, and interal rate of return is the best to choose. (A). 898613.67 (NPV); 4.625 years (payback period); 17.48% per year (B) 1407172.81 (NPV); 2.778 years (payback period); 30.93% per year (C) 1487140.50 (NPV); 3.00 years (payback period); 32.06% per year
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 10% per year. Initial cost $2,500 $4,000 Annual benefit 500 600 Life You do not need to interpolate, just answer the closest n that surrounds your number. For example between year so and so.
Consider the following two investment alternatives. Determine the range of investment costs for Alternative B (i.e., min. value < X
If a finite-life alternative (for example, 5 years) is compared to one with an indefinite or very long life, capitalized costs can be used. To determine capitalized cost for the finite life alternative, calculate the equivalent A value for one life cycle and divide by the interest rate. Select one: a. True b. False The annual worth method of comparing alternatives is often preferred to the present worth method, Select one: a. because AW for the first cycle is not the AW for the second. b. because the AW comparison is performed for only one life cycle. c. because AW is determined at MARR value. d. none of the answers. Last cash flow occurs in the same period as P Select one: a. False O b. True Straight line depreciation applies when book value decreases linearly with time. Select one: a. True b. False
1. Compare the following alternatives using the Net Present Worth (NPW) method. Rate 5% per year. Construction $ Benefits $/yr Life years A 400,000 200,000 5 700,000 220,000 10 2. Solve the same problem using the Net Equivalent Uniform Annual (NEUA) method. What do you conclude?
Consider alternatives A and B as shown below. The interest rate is 9%. For parts a) and b), let X = $250. For parts a) and b), which alternative is preferred: a) by equivalent annual worth analysis? b) by payback period? c) Compute the value of X that makes the two alternatives equally desirable. Initial cost Uniform annual benefit Salvage value Useful life, in years A $500 200 100 5 B $900 X 120 5
Consider the following four alternatives. Three are do-something and one is Do -Nothing. Alternative A B D Cost $O $50 $30 $40 Net annual benefit Useful life (years) Which is the preferred alternative? If 10% interest rate is selected. Use PW analysis. $O $14 $5 $7 5 10 10
Use the ERR method to evaluate the economic worth of the diagram shown below. The value of the external reinvestment rate, ∈, is 8% per year. The MARR = 10% per year.
The following two alternatives are given. Data A B. First Cost $8,200 $5,600 Annual Cost $1,000 $800 Annual Benefit $2,700 $2,100 Life, Years 7. Salvage Value $2,800 $1,000 Assume that MARR is 15%. Use the incremental rate of return analysis to determine which alternative (A or B) one should choose. Find the AIRR, or a range of AIRR. O 10% O 10-12% O 12-15% O > 15%
7. Future values (S2.1) Compute the future value of a $100 investment for the following combinations of rates and times. = 6%, t = 10 years. b. r= 6%, t = 20 years. c. r = 4%, t = 10 years. d. r = 4%, t = 20 years. a. r =
APPLY THE CONCEPTS: Present value of a single amount in the future (better overview of question in attachment) As it is important to know what a current investment will yield at a point in the future, it is equally important to understand what investment would be required today in order to yield a required future return. The following timeline displays what present investment is required in order to yield $8,000 three years from now, assuming annual compounding at 5%. Future Value: $8,000 Year 1 Year 2 Year 3 Present Value: ? The most straightforward method for calculating the present value of a future amount is to use the Present Value Table. By multiplying the future amount by the appropriate figure from the table, one may adequately determine the present value. + Present Value of a Future Amount Table1 - Present Value of $1 at Compound Interest Period 5% 6% 7% 8% 9% 10% 11% 12% 1 0.952 0.943 0.935 0.926 0.917 0.909…
Assume that you will receive $2500 at the end of 6 years and want to know the present value (PV) of that future sum. Assuming a positive interest rate (required rate of return), which of the following is a possible number for the present value of the $2500? Even without knowing the interest rate, it is possible to answer this question. O A. $2742.53 B. $2632.45 O C. $1967.25 OD. $2572.50 O E. None of the above is a possible number.

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