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
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
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
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
Evaluate the two alternatives A and B and decide the economic justified alternative using: Present worth method, Annual worth method, Future worth method I.R.R method E.R.R Method , E.R.R.R method M.A.R.R = 15%, the details of alternatives are shown in the table below Alternatives B A $6,000 $7,500 Investments Useful life (years) 5 10 Annual disbursements $2,500 $3,500 Annual revenues $4,500 $6,000 Salvage values $500 $1,000
Please help me with show all calculation thanku
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.
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
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…
Part B: Solve the following excersises: 1) Consider the following timeline where the firm requires the annuity to provide a minimum return of.....%. (write any number for interest rate): Project A End of Yoar -50,000 15,000 15,000 15,000 15,000 Calculate Future Value (FV) using two methods (Timeline and Equation) and compare the answers.
Subject:- finance

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