Best choice between option A and B,by calculating the present worth.

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Answer 1

Question

Chapter 5, Problem 38P

To determine

To find:Best choice between option A and B,by calculating the present worth.

Expert Solution & Answer

Answer to Problem 38P

The better option is B which would save $8.30M

Explanation of Solution

Given information:

First CostO & M Cost/yearSalvageLifeA$14M$3.5M$2M8 yearsB22M3M7.5M16 years

Formula used:

PWA=−14−A( ( 1+i )N−1i ( 1+i )N)+F(1 ( 1+i )N)− A( ( 1+i )N−1i ( 1+i )N)+ F(1 ( 1+i )N)

PWB=−22− A( ( 1+i )N−1i ( 1+i )N)+ F(1 ( 1+i )N)

PW represents Present Worth

A is end of period cash receipt or disbursement in a uniform series continuing for “n” periods

F is Future sum of money at the end of the n^t^h interest period, which is equivalent to “P” with interest rate “i”.

P isPresent sum of money

i is Effective interest rate per interest period

N is Number of interest period

Calculation:

By using the above-mentionedformulas, Present Worth is calculated.

Present Worth for choice A

PWA =( −14−3.5( ( 1+.18 ) 8 −1 .18 ( 1+.18 ) 8 )+( 2−14 )( 1 ( 1+.18 ) 8 ) − 3.5( ( 1+.18 ) 8 −1 .18 ( 1+.18 ) 8 )+2( 1 ( 1+.18 ) 8 ))=−14−3.5(4.08)−12(0.27)−3.5(4.08)+2(0.27)=−$45.26M

The above formula gives the Present Worth for choice A of −$45.26M

Present Worth for choice B

PWB =−22−3( ( 1+.18 ) 16 −1 .18 ( 1+.18 ) 16 )+7.5(1 ( 1+.18 ) 16 )=−14−3(5.16)+7.5(0.07)=−$36.96M

The above formula gives the Present Worth for choice Bof −$36.96

Therefore, the best choice between A & B is B as it saves $8.30M

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Students have asked these similar questions

Problem Set#8 Part I You are the manager of a firm producing a good in a particular market environment. The following table details the price charged (P) and the total cost (TC) incurred by your firm at various production levels (Q). Price (P) $125 Quantity (Q) Total Cost (TC) 0 150 125 1 175 125 2 210 125 3 255 125 4 310 125 5 375 125 6 450 125 7 535 125 8 630 125 9 735 125 10 850 125 11 975 125 12 1,110 125 13 1,255 125 14 1,410 125 15 1,575 1. Based on the information provided in the table above, identify the type of market structure in which the firm operates. Explain your reasoning! 2. Add seven columns to the table above, one for each of the following variables: AFC, ATC, VC, AVC, MC, TR, and MR

The table below presents the demand schedule and marginal costs facing a monopolist producer. a. Fill in the total revenue and marginal revenue columns. Instructions: Enter your answers as a whole number. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Leave no cells blank. Enter 0 if appropriate. Q 0 P ($) 8 TR ($) 0 MR ($) MC ($) 1 7 2 6 3 5 1 2 3 4 4 4 5 5 3 6 6 2 7 1 8 0 b. What is the profit-maximizing level of output? units c. What price will the monopolist charge to maximize profits? $ 7 8

not use ai please

Answer 2

Question

Chapter 5, Problem 38P

To determine

To find:Best choice between option A and B,by calculating the present worth.

Expert Solution & Answer

Answer to Problem 38P

The better option is B which would save $8.30M

Explanation of Solution

Given information:

First CostO & M Cost/yearSalvageLifeA$14M$3.5M$2M8 yearsB22M3M7.5M16 years

Formula used:

PWA=−14−A( ( 1+i )N−1i ( 1+i )N)+F(1 ( 1+i )N)− A( ( 1+i )N−1i ( 1+i )N)+ F(1 ( 1+i )N)

PWB=−22− A( ( 1+i )N−1i ( 1+i )N)+ F(1 ( 1+i )N)

PW represents Present Worth

A is end of period cash receipt or disbursement in a uniform series continuing for “n” periods

F is Future sum of money at the end of the n^t^h interest period, which is equivalent to “P” with interest rate “i”.

P isPresent sum of money

i is Effective interest rate per interest period

N is Number of interest period

Calculation:

By using the above-mentionedformulas, Present Worth is calculated.

Present Worth for choice A

PWA =( −14−3.5( ( 1+.18 ) 8 −1 .18 ( 1+.18 ) 8 )+( 2−14 )( 1 ( 1+.18 ) 8 ) − 3.5( ( 1+.18 ) 8 −1 .18 ( 1+.18 ) 8 )+2( 1 ( 1+.18 ) 8 ))=−14−3.5(4.08)−12(0.27)−3.5(4.08)+2(0.27)=−$45.26M

The above formula gives the Present Worth for choice A of −$45.26M

Present Worth for choice B

PWB =−22−3( ( 1+.18 ) 16 −1 .18 ( 1+.18 ) 16 )+7.5(1 ( 1+.18 ) 16 )=−14−3(5.16)+7.5(0.07)=−$36.96M

The above formula gives the Present Worth for choice Bof −$36.96

Therefore, the best choice between A & B is B as it saves $8.30M

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Answer 3

Question

Chapter 5, Problem 38P

To determine

To find:Best choice between option A and B,by calculating the present worth.

Expert Solution & Answer

Answer to Problem 38P

The better option is B which would save $8.30M

Explanation of Solution

Given information:

First CostO & M Cost/yearSalvageLifeA$14M$3.5M$2M8 yearsB22M3M7.5M16 years

Formula used:

PWA=−14−A( ( 1+i )N−1i ( 1+i )N)+F(1 ( 1+i )N)− A( ( 1+i )N−1i ( 1+i )N)+ F(1 ( 1+i )N)

PWB=−22− A( ( 1+i )N−1i ( 1+i )N)+ F(1 ( 1+i )N)

PW represents Present Worth

A is end of period cash receipt or disbursement in a uniform series continuing for “n” periods

F is Future sum of money at the end of the n^t^h interest period, which is equivalent to “P” with interest rate “i”.

P isPresent sum of money

i is Effective interest rate per interest period

N is Number of interest period

Calculation:

By using the above-mentionedformulas, Present Worth is calculated.

Present Worth for choice A

PWA =( −14−3.5( ( 1+.18 ) 8 −1 .18 ( 1+.18 ) 8 )+( 2−14 )( 1 ( 1+.18 ) 8 ) − 3.5( ( 1+.18 ) 8 −1 .18 ( 1+.18 ) 8 )+2( 1 ( 1+.18 ) 8 ))=−14−3.5(4.08)−12(0.27)−3.5(4.08)+2(0.27)=−$45.26M

The above formula gives the Present Worth for choice A of −$45.26M

Present Worth for choice B

PWB =−22−3( ( 1+.18 ) 16 −1 .18 ( 1+.18 ) 16 )+7.5(1 ( 1+.18 ) 16 )=−14−3(5.16)+7.5(0.07)=−$36.96M

The above formula gives the Present Worth for choice Bof −$36.96

Therefore, the best choice between A & B is B as it saves $8.30M

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Answer 4

Question

Chapter 5, Problem 38P

To determine

To find:Best choice between option A and B,by calculating the present worth.

Expert Solution & Answer

Answer to Problem 38P

The better option is B which would save $8.30M

Explanation of Solution

Given information:

First CostO & M Cost/yearSalvageLifeA$14M$3.5M$2M8 yearsB22M3M7.5M16 years

Formula used:

PWA=−14−A( ( 1+i )N−1i ( 1+i )N)+F(1 ( 1+i )N)− A( ( 1+i )N−1i ( 1+i )N)+ F(1 ( 1+i )N)

PWB=−22− A( ( 1+i )N−1i ( 1+i )N)+ F(1 ( 1+i )N)

PW represents Present Worth

A is end of period cash receipt or disbursement in a uniform series continuing for “n” periods

F is Future sum of money at the end of the n^t^h interest period, which is equivalent to “P” with interest rate “i”.

P isPresent sum of money

i is Effective interest rate per interest period

N is Number of interest period

Calculation:

By using the above-mentionedformulas, Present Worth is calculated.

Present Worth for choice A

PWA =( −14−3.5( ( 1+.18 ) 8 −1 .18 ( 1+.18 ) 8 )+( 2−14 )( 1 ( 1+.18 ) 8 ) − 3.5( ( 1+.18 ) 8 −1 .18 ( 1+.18 ) 8 )+2( 1 ( 1+.18 ) 8 ))=−14−3.5(4.08)−12(0.27)−3.5(4.08)+2(0.27)=−$45.26M

The above formula gives the Present Worth for choice A of −$45.26M

Present Worth for choice B

PWB =−22−3( ( 1+.18 ) 16 −1 .18 ( 1+.18 ) 16 )+7.5(1 ( 1+.18 ) 16 )=−14−3(5.16)+7.5(0.07)=−$36.96M

The above formula gives the Present Worth for choice Bof −$36.96

Therefore, the best choice between A & B is B as it saves $8.30M

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Answer 5

Chapter 5, Problem 38P

To determine

To find:Best choice between option A and B,by calculating the present worth.

Expert Solution & Answer

Answer to Problem 38P

The better option is B which would save $8.30M

Explanation of Solution

Given information:

First CostO & M Cost/yearSalvageLifeA$14M$3.5M$2M8 yearsB22M3M7.5M16 years

Formula used:

PWA=−14−A( ( 1+i )N−1i ( 1+i )N)+F(1 ( 1+i )N)− A( ( 1+i )N−1i ( 1+i )N)+ F(1 ( 1+i )N)

PWB=−22− A( ( 1+i )N−1i ( 1+i )N)+ F(1 ( 1+i )N)

PW represents Present Worth

A is end of period cash receipt or disbursement in a uniform series continuing for “n” periods

F is Future sum of money at the end of the n^t^h interest period, which is equivalent to “P” with interest rate “i”.

P isPresent sum of money

i is Effective interest rate per interest period

N is Number of interest period

Calculation:

By using the above-mentionedformulas, Present Worth is calculated.

Present Worth for choice A

PWA =( −14−3.5( ( 1+.18 ) 8 −1 .18 ( 1+.18 ) 8 )+( 2−14 )( 1 ( 1+.18 ) 8 ) − 3.5( ( 1+.18 ) 8 −1 .18 ( 1+.18 ) 8 )+2( 1 ( 1+.18 ) 8 ))=−14−3.5(4.08)−12(0.27)−3.5(4.08)+2(0.27)=−$45.26M

The above formula gives the Present Worth for choice A of −$45.26M

Present Worth for choice B

PWB =−22−3( ( 1+.18 ) 16 −1 .18 ( 1+.18 ) 16 )+7.5(1 ( 1+.18 ) 16 )=−14−3(5.16)+7.5(0.07)=−$36.96M

The above formula gives the Present Worth for choice Bof −$36.96

Therefore, the best choice between A & B is B as it saves $8.30M

Answer 6

Chapter 5, Problem 38P

To determine

To find:Best choice between option A and B,by calculating the present worth.

Expert Solution & Answer

Answer to Problem 38P

The better option is B which would save $8.30M

Explanation of Solution

Given information:

First CostO & M Cost/yearSalvageLifeA$14M$3.5M$2M8 yearsB22M3M7.5M16 years

Formula used:

PWA=−14−A( ( 1+i )N−1i ( 1+i )N)+F(1 ( 1+i )N)− A( ( 1+i )N−1i ( 1+i )N)+ F(1 ( 1+i )N)

PWB=−22− A( ( 1+i )N−1i ( 1+i )N)+ F(1 ( 1+i )N)

PW represents Present Worth

A is end of period cash receipt or disbursement in a uniform series continuing for “n” periods

F is Future sum of money at the end of the n^t^h interest period, which is equivalent to “P” with interest rate “i”.

P isPresent sum of money

i is Effective interest rate per interest period

N is Number of interest period

Calculation:

By using the above-mentionedformulas, Present Worth is calculated.

Present Worth for choice A

PWA =( −14−3.5( ( 1+.18 ) 8 −1 .18 ( 1+.18 ) 8 )+( 2−14 )( 1 ( 1+.18 ) 8 ) − 3.5( ( 1+.18 ) 8 −1 .18 ( 1+.18 ) 8 )+2( 1 ( 1+.18 ) 8 ))=−14−3.5(4.08)−12(0.27)−3.5(4.08)+2(0.27)=−$45.26M

The above formula gives the Present Worth for choice A of −$45.26M

Present Worth for choice B

PWB =−22−3( ( 1+.18 ) 16 −1 .18 ( 1+.18 ) 16 )+7.5(1 ( 1+.18 ) 16 )=−14−3(5.16)+7.5(0.07)=−$36.96M

The above formula gives the Present Worth for choice Bof −$36.96

Therefore, the best choice between A & B is B as it saves $8.30M

Answer 7

Chapter 5, Problem 38P

To determine

To find:Best choice between option A and B,by calculating the present worth.

Answer 8

Expert Solution & Answer

Answer to Problem 38P

The better option is B which would save $8.30M

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Given information:

First CostO & M Cost/yearSalvageLifeA$14M$3.5M$2M8 yearsB22M3M7.5M16 years

Formula used:

PWA=−14−A( ( 1+i )N−1i ( 1+i )N)+F(1 ( 1+i )N)− A( ( 1+i )N−1i ( 1+i )N)+ F(1 ( 1+i )N)

PWB=−22− A( ( 1+i )N−1i ( 1+i )N)+ F(1 ( 1+i )N)

PW represents Present Worth

A is end of period cash receipt or disbursement in a uniform series continuing for “n” periods

F is Future sum of money at the end of the n^t^h interest period, which is equivalent to “P” with interest rate “i”.

P isPresent sum of money

i is Effective interest rate per interest period

N is Number of interest period

Calculation:

By using the above-mentionedformulas, Present Worth is calculated.

Present Worth for choice A

PWA =( −14−3.5( ( 1+.18 ) 8 −1 .18 ( 1+.18 ) 8 )+( 2−14 )( 1 ( 1+.18 ) 8 ) − 3.5( ( 1+.18 ) 8 −1 .18 ( 1+.18 ) 8 )+2( 1 ( 1+.18 ) 8 ))=−14−3.5(4.08)−12(0.27)−3.5(4.08)+2(0.27)=−$45.26M