Q1) A company is planning to expand its production operations, it has three alternatives which has the cash flow as represent in the table below, suggest the best Project using the Equivalent Annual Worth Comparison Method if you know that the interest rate is (10%). cost (CU/ Salvage value Details Investment Life(year) revenue |(CU/year) year) amount Project 1 Project 2 Project 3 (CU) 2300 000 1900 000 (CU) 300 000 400 000 100 000 650 000 155 000 550 000 9 2800 000 550 000 500 000 400 000 3 All projects need a maintenance for some machines every three years (CU) which equal to 100 000 cu for all projects. There is a revenue in the 2nd year of project 1 equal to 170 000 There is a revenue in the 5th year of project 2 equal to 200 000 There is a revenue in the 3rd year of project 3 equal to 250 000
Q1) A company is planning to expand its production operations, it has three alternatives which has the cash flow as represent in the table below, suggest the best Project using the Equivalent Annual Worth Comparison Method if you know that the interest rate is (10%). cost (CU/ Salvage value Details Investment Life(year) revenue |(CU/year) year) amount Project 1 Project 2 Project 3 (CU) 2300 000 1900 000 (CU) 300 000 400 000 100 000 650 000 155 000 550 000 9 2800 000 550 000 500 000 400 000 3 All projects need a maintenance for some machines every three years (CU) which equal to 100 000 cu for all projects. There is a revenue in the 2nd year of project 1 equal to 170 000 There is a revenue in the 5th year of project 2 equal to 200 000 There is a revenue in the 3rd year of project 3 equal to 250 000
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
Related questions
Question
Transcribed Image Text:Q1) A company is planning to expand its production operations, it has three
alternatives which has the cash flow as represent in the table below, suggest the best
Project using the Equivalent Annual Worth Comparison Method if you know that the
interest rate is (10%).
Details
Salvage
value
Investment
cost (CU/
Life(year)
revenue
|(CU/year) year)
amount
(CU)
Project 1 | 2300 000
Project 2 1900 000
Project 3 2800 000
|(CU)
300 000
550 000
400 000
100 000
650 000
155 000
550 000
500 000
400 000
All projects need a maintenance for some machines every three years (CU) which
equal to 100 000 cu for all projects.
There is a revenue in the 2nd year of project 1 equal to 170 000
There is a revenue in the 5th year of project 2 equal to 200 000
There is a revenue in the 3rd year of project 3 equal to 250 000
693
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 4 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education