nvestor group offered three proposals: a) To invest $2,300,000 on this product with annual O&M of $45,000 starting end of year one. The proposal is expected to result in annual benefit in cash flow of $750,000, over 4 years period with interest rate of 12 %. b) To invest $1,800,000 on this product with annual O&M of $75,000 starting end of year one. The proposal is expected to result in annual benefit in cash flow of $715,000, over 7 years period with interest rate of 12 %. c)To invest $1,500,000 on this product with annual O&M of $90,000 starting end of year one. The proposal is expected to result in benefit in cash flow of $120,000 first year, which increases by $50000 yearly over 28 years period with interest rate of 12 %. Which proposal you should accept? please use the present worth analysis and please provide the cash flow diagrams for each proposal.
Investor group offered three proposals:
a) To invest $2,300,000 on this product with annual O&M of $45,000 starting end of year one. The proposal is expected to result in annual benefit in cash flow of $750,000, over 4 years period with interest rate of 12 %.
b) To invest $1,800,000 on this product with annual O&M of $75,000 starting end of year one. The proposal is expected to result in annual benefit in cash flow of $715,000, over 7 years period with interest rate of 12 %.
c)To invest $1,500,000 on this product with annual O&M of $90,000 starting end of year one. The proposal is expected to result in benefit in cash flow of $120,000 first year, which increases by $50000 yearly over 28 years period with interest rate of 12 %.
Which proposal you should accept? please use the present worth analysis and please provide the cash flow diagrams for each proposal.
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