ENGINEERING ECO ANALYSIS W/STUDY GUIDE
13th Edition
ISBN: 9780190693053
Author: NEWNAN
Publisher: Oxford University Press
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Question
Chapter 3, Problem 9P
To determine
The explanation of the choice made by each woman.
Expert Solution & Answer
Answer to Problem 9P
Magdalen made a correct choice if the annual interest is greater than
Miriam made a correct choice if the annual interest is less than
Mary June made a correct choice if the annual interest rate is equal to
Explanation of Solution
Given:
Two different cash flows.
- will be received today.
Concept used:
There are two available options.
Either take
Calculation:
Write the expression to calculate the present value of
Here, interest is
Explanation for the choice made by Magdalen:
Magdalen choose to take
Substitute,
Therefore Magdalen made a correct choice if the annual interest is greater than
Explanation for the choice made by Miriam:
Miriam chooses to take
Substitute,
Therefore Miriam made a correct choice if the annual interest is less than
Explanation for the choice made by Mary June Mary June choice is indifferent between taking
Substitute,
Therefore, Mary June made a correct choice if the annual interest rate is equal to
Conclusion:
Magdalen made a correct choice if the annual interest is greater than
Miriam made a correct choice if the annual interest is less than
Mary June made a correct choice if the annual interest rate is equal to
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Chapter 3 Solutions
ENGINEERING ECO ANALYSIS W/STUDY GUIDE
Ch. 3 - Prob. 1QTCCh. 3 - Prob. 2QTCCh. 3 - Prob. 3QTCCh. 3 - Prob. 4QTCCh. 3 - Prob. 5QTCCh. 3 - Prob. 1PCh. 3 - Prob. 2PCh. 3 - Prob. 3PCh. 3 - Prob. 4PCh. 3 - Prob. 5P
Ch. 3 - Prob. 6PCh. 3 - Prob. 7PCh. 3 - Prob. 8PCh. 3 - Prob. 9PCh. 3 - Prob. 10PCh. 3 - Prob. 11PCh. 3 - Prob. 12PCh. 3 - Prob. 13PCh. 3 - Prob. 14PCh. 3 - Prob. 15PCh. 3 - Prob. 16PCh. 3 - Prob. 17PCh. 3 - Prob. 18PCh. 3 - Prob. 19PCh. 3 - Prob. 20PCh. 3 - Prob. 21PCh. 3 - Prob. 22PCh. 3 - Prob. 23PCh. 3 - Prob. 24PCh. 3 - Prob. 25PCh. 3 - Prob. 26PCh. 3 - Prob. 27PCh. 3 - Prob. 28PCh. 3 - Prob. 29PCh. 3 - Prob. 30PCh. 3 - Prob. 31PCh. 3 - Prob. 32PCh. 3 - Prob. 33PCh. 3 - Prob. 34PCh. 3 - Prob. 35PCh. 3 - Prob. 36PCh. 3 - Prob. 37PCh. 3 - Prob. 38PCh. 3 - Prob. 39PCh. 3 - Prob. 40PCh. 3 - Prob. 41PCh. 3 - Prob. 42PCh. 3 - Prob. 43PCh. 3 - Prob. 44PCh. 3 - Prob. 45PCh. 3 - Prob. 46PCh. 3 - Prob. 47PCh. 3 - Prob. 48PCh. 3 - Prob. 49PCh. 3 - Prob. 50PCh. 3 - Prob. 51PCh. 3 - Prob. 52PCh. 3 - Prob. 53PCh. 3 - Prob. 54PCh. 3 - Prob. 55PCh. 3 - Prob. 56PCh. 3 - Prob. 57PCh. 3 - Prob. 58P
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