The parameters of this question are on the sheet below. We have determine that the best option using the equivalent annuity method is the Large. Because we fouand that: The Annual Worth of small = $19,112.45 The Annual Worth of Medium = $26,667.4 The Annual Worth of Large = $27,413 Now, Assume that the planning period is 5 years, what assumptions should be made for the Small and Medium models to ensure that their equivalent annuities calculated before remain true!! In other words, calculate the recovery values of the Small model and medium model to year 5. Since the useful life of the Grand model is already 5 years, you do not have to perform any further calculations for this model. Support your response with calculations that are done in your discussion paper.
The parameters of this question are on the sheet below. We have determine that the best option using the equivalent annuity method is the Large. Because we fouand that: The Annual Worth of small = $19,112.45 The Annual Worth of Medium = $26,667.4 The Annual Worth of Large = $27,413 Now, Assume that the planning period is 5 years, what assumptions should be made for the Small and Medium models to ensure that their equivalent annuities calculated before remain true!! In other words, calculate the recovery values of the Small model and medium model to year 5. Since the useful life of the Grand model is already 5 years, you do not have to perform any further calculations for this model. Support your response with calculations that are done in your discussion paper.
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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The parameters of this question are on the sheet below.
We have determine that the best option using the equivalent
Because we fouand that: The Annual Worth of small = $19,112.45
The Annual Worth of Medium = $26,667.4
The Annual Worth of Large = $27,413
Now, Assume that the planning period is 5 years, what assumptions should be made for the Small and Medium models to ensure that their equivalent
Transcribed Image Text:small
Medium
Large
Investment ($)
1500
2000
5000
Operating costs $/ hour
Revenue $/ hour
Hours /year
35
50
76
55
75
100
1000
1100
1200
Economic life (years)
2
5
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