Project Alternatives n Project A1 Cash Flows Project A2 Cash Flows 0-$14,000 1+ $4,000 2+ $4,000 3+$12,000 $17,000 + $21,000 A If MARR=15% and assuming indefinite required service and repeatability, use the incremental NPV and IRR analyses in parts (a) and (b) of the problem, respectively, to choose the project in part (c). Please note that project alternatives A1 and A2 have different lives, namely three years for A1 and one year for A2. The alternatives should be compared over the same period, so project A2 will have to be repeated twice."
Project Alternatives n Project A1 Cash Flows Project A2 Cash Flows 0-$14,000 1+ $4,000 2+ $4,000 3+$12,000 $17,000 + $21,000 A If MARR=15% and assuming indefinite required service and repeatability, use the incremental NPV and IRR analyses in parts (a) and (b) of the problem, respectively, to choose the project in part (c). Please note that project alternatives A1 and A2 have different lives, namely three years for A1 and one year for A2. The alternatives should be compared over the same period, so project A2 will have to be repeated twice."
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
Problem 1PS
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Transcribed Image Text:"Consider the following two mutually-exclusive altematives:
Project Alternatives
n Project A1 Cash Flows Project A2 Cash Flows
0-514,000
1+$4,000
- $17,000
$21,000
2- 54,000
3-$12,000
If MARR=15% and assuming indefinite required service and repeatability, use the incremental NPV and IRR
analyses in parts (a) and (b) of the problem, respectively, to choose the project in part (c). Please note that project
alternatives A7 and A2 have different lives, namely three years for A1 and one year for A2. The alternatives should be
compared over the same period, so project A2 will have to be repeated twice."
axThe Net Present Value of the incremental investment is:
YbrThe rternal Rate of Retun of the incremental investment is:
(oWe shoulo choose project alternative:
Note: Please enrer your onswvers to two decimal places. If using the interest factor method, apply the value of the factor
os presented in the table or spreocsheet (with all four decimal places).
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