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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Consider the following two investment alternatives. Determine the range of investment costs for Alternative B (i.e., min. value < X
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?
You are comparing two annuities. Annuity A pays $115 at the end of each year for 5 years. Annuity B pays $105 at the beginning of each year for 5 years. The rate of return on both annuities is 12 percent. Which one of the following statements is correct given this information? Annuity B has both a higher present value and a higher future value than Annuity A. O Annuity A has both a higher present value and a higher future value than Annuity B. O Annuity A has the same present value and future value as Annuity B.
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.
Consider three mutually exclusive alternatives. The MARR is 10%. x Y z |- $125 - $60 - $65 20 15 Year 10 1 40 15 2 40 20 3 40 15 20 4 40 15 20 (a) For Alt. X, compute the benefit-cost ratio. (b) Based on the payback period, which alternative should be selected? (c) Determine the preferred altemative based on an exact economic analysis method.
Subject:- finance
Suppose an investment has an initial capital cost of $1100, an ongoing cost of $6.50 per year and an annual benefit of $80. If the project lasts for 20 years and the discount rate is 7%, the internal rate of return is: Provide your answer in percentage form (e.g. an IRR of 17.66% should be entered as 17.66) to 2 decimal places. Do not include any $ or % 's in your response.
Given the financial data for four mutually exclusive alternatives in the table below, determine the best alternative using the incremental rate of return (AROR) analysis. MARR = 10%. A B C D $15,000 $21,200 $36,000 45,000 1,600 700 400 1,000 First cost O &M Cost/ year Benefit/year 8,000 9,000 13,000 Salvage value 3,000 4,600 6,000 Life in years 4 15,000 10,000
You have been given the expected return data shown in the first table on three assets—F, G, and H—over the period 2018-2021 Year Asset F Asset G Asset H 2019 5 12 12 2020 10 9 7 2021 13 21 4 2022 6.5 6 10.5 Using these assets, you have isolated the three investment alternatives shown in the following table. Alternative Investment 1 100% of asset G 2 40% of asset F and 60% of asset G 3 50% of asset F and 50% of asset H Calculate the expected return over the 4-year period for each of the three alternative Calculate the standard deviation of returns over the 4-year period for each of the three alternatives. Use your findings in parts a and b to calculate the coefficient of variation for each of the three alternatives. On the basis of your findings, which of the three investment alternatives do you recommend? Why?
Two alternatives are being considered: First cost Uniform annual benefit Useful life, in years If the minimum attractive rate of return is 7%, which alternative should be selected? Solution: 2. Terms n= 8 1. Use the increment analysis, we should use B-A ο ΔΑΞ A 3. The Increment CFD has 3 basic patterns: ο ΔΡ= ο ΔΕΞ 4. AROR= 8.32 % 5. Choose B 5400 9800 1750 1850 4 8 B occurred at end of year 4
Consider the following future value. (Round your answers to the nearest cent.) $3,739 at 11 7/8% compounded monthly for 17 years and 7 months (a) Find the present value that will generate the given future value.$ ____________(b) Interpret the present value. One would have to invest $ ___________ now to have the future value in the given time.
PRESENT VALUE, you have a choice of accepting either of the two, 5-year cash flow streams or lump sum amounts’. One cash flow stream is an annuity, and the other is a mixed stream. You may accept alternative A or B Either as cash flow stream or as a lump-sum. Given the cash flow stream and lump-sum amounts associated with each, and assuming a 9% opportunity cost, which alternative (A or B) And in which form (cash flow stream or lump-sum amount) would you prefer? End of year Alternative A Alternative B 1 $700 $1,100 2 $700 $900 3 $700 7$00 4 $700 $500 5 $700 $300 LUMP-SUM AMOUNT At time zero $2,825 $2,800

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