Q4. The cash flow details of a public project is as follows= BD 250000Initial cost/investmentAnnual benefits/revenues= BD 120000Worth of annual costSalvage valueInterest rate per year 8% and useful lie 30 YearsUse the three project evaluation methods( PW, FW, AW)= BD 12,000= BD 150000

Here we calculate the value of PW , FW and AW by using the given information and conclude the…

Q4. The cash flow details of a public project is as follows Initial cost /investment = BD 250000 Annual benefits/revenues = BD 120000 Worth of annual cost = BD 12,000 Salvage value Interest rate per year = 8% and useful lie = 30 Years Use the three project evaluation methods( PW, FW, AW) = BD 150000

Q4. The cash flow details of a public project is as follows Initial cost /investment = BD 250000 Annual benefits/revenues = BD 120000 Worth of annual cost = BD 12,000 Salvage value Interest rate per year = 8% and useful lie = 30 Years Use the three project evaluation methods( PW, FW, AW) = BD 150000

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 10E

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Solve this problem in Excel. The following two alternatives are mutually exclusive. (a) Which one will you select if your MARR is 15% per year? Use rate of return analysis. (b) Graph interest rate vs. present value for both option 1 and 2. ( c) Discuss how your selection between option 1 and 2 will change when MARR is changed and at which interest rate the two options are the same economically. Alternative Initial Cost Annual Benefit Life, years Ordinary (O) $38,000 $9,400 5 Above average (AA) $35,000 $9,000 6
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The FW analysis: a. Is appropriate when one plans to achieve a particular financial goal at some point in the future b. Sometimes results in the same decision as PW and AW c. Does not utilize the concept of time value of money d. All of the above.
A project is being planned that has an initial investment at time 0, annual revenuesand expenses, and a salvage value at the end of the project lifespan (20 years). The financialvalues are summarized below:Initial investment amount at time 0 $150,000Estimated annual revenue $34,500 per yearEstimated annual expenses $8,700 per yearEstimated salvage value at end of lifespan $10,000Minimum attractive rate of return (MARR) 15%a. Calculate the capital recovery amount CR(i%).b. Using the annual worth (AW) method, determine whether purchasing the equipmentis economically justified.c. Repeat part (a) using the internal rate of return (IRR) method based on annual worth(AW).d. Using the present worth (PW) method, determine the break-even time period afterwhich purchase of the equipment generates a profit. (Find N when PW = 0) year period.
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What Term goes with what Concept
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Do not use excel please. Show equations used.