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Part 1: Based on the capitalized cost analysis, which option is better: Option A: paying 220 JD every 5 years forever starting 5 years from now at an interest rate of 10% per year. Option B: paying 45 JD every year forever at an interest rate of 12% per year.

Part 1: Based on the capitalized cost analysis, which option is better: Option A: paying 220 JD every 5 years forever starting 5 years from now at an interest rate of 10% per year. Option B: paying 45 JD every year forever at an interest rate of 12% per year.

Essentials Of Investments
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
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Part 1: Based on the capitalized cost analysis, which option is better: Option A: paying 220 JD every 5 years forever starting 5 years from now at an interest rate of 10% per year. Option B: paying 45 JD every year forever at an interest rate of 12% per year. Part 2: John, who works at Swatch, has decided to use the weighted attribute method to compare three systems for manufacturing a watchband. The vice president and her assistant VP have evaluated each of three attributes in terms of importance to them, and John has placed an evaluation from 0 to 100 on each alternative for the three attributes. John's ratings for each alternative are as follows: Importance Score Economic return > MARR High throughput Low scrap rate VP Assistant VP 20 100 80 100 20 Attribute Economic return> MARR High throughput Low scrap rate a) Use the weights above (in the table) to evaluate the alternatives. b) Are the results the same for both persons' weights? Why? Alternative 1 2 3 50 70 100 100 60 30 100 40 50
Transcribed Image Text:Part 1: Based on the capitalized cost analysis, which option is better: Option A: paying 220 JD every 5 years forever starting 5 years from now at an interest rate of 10% per year. Option B: paying 45 JD every year forever at an interest rate of 12% per year. Part 2: John, who works at Swatch, has decided to use the weighted attribute method to compare three systems for manufacturing a watchband. The vice president and her assistant VP have evaluated each of three attributes in terms of importance to them, and John has placed an evaluation from 0 to 100 on each alternative for the three attributes. John's ratings for each alternative are as follows: Importance Score Economic return > MARR High throughput Low scrap rate VP Assistant VP 20 100 80 100 20 Attribute Economic return> MARR High throughput Low scrap rate a) Use the weights above (in the table) to evaluate the alternatives. b) Are the results the same for both persons' weights? Why? Alternative 1 2 3 50 70 100 100 60 30 100 40 50
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