The product development group of a high-tech electronics company developed five proposals for new products. The company wants to expand its product offerings, so it will undertake all projects that are economically attractive at the company’s MARR of 20% per year. The cash flows (in $1000 units) associated with each project are estimated. Which projects, if any, should the company accept on the basis of a present worth analysis? Project A B C D E Initial investment, $ −400 −510 −660 −820 −900 Operating cost, $/year −100 −140 −280 −315 −450 Revenue, $/year 360 235 400 605 790 Salvage value, $ — 22 — 80 95 Life, years 3 10 5 8 4
The product development group of a high-tech electronics company developed five proposals for new products. The company wants to expand its product offerings, so it will undertake all projects that are economically attractive at the company’s MARR of 20% per year. The cash flows (in $1000 units) associated with each project are estimated. Which projects, if any, should the company accept on the basis of a present worth analysis? Project A B C D E Initial investment, $ −400 −510 −660 −820 −900 Operating cost, $/year −100 −140 −280 −315 −450 Revenue, $/year 360 235 400 605 790 Salvage value, $ — 22 — 80 95 Life, years 3 10 5 8 4
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
The product development group of a high-tech
electronics company developed five proposals
for new products. The company wants to expand
its product offerings, so it will undertake all projects
that are economically attractive at the company’s
MARR of 20% per year. The cash flows
(in $1000 units) associated with each project are
estimated. Which projects, if any, should the
company accept on the basis of a present worth
analysis?
Project A B C D E
Initial investment, $ −400 −510 −660 −820 −900
Operating cost, $/year −100 −140 −280 −315 −450
Revenue, $/year 360 235 400 605 790
Salvage value, $ — 22 — 80 95
Life, years 3 10 5 8 4
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