ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Question
Chapter 8, Problem 35P
(a)
To determine
To construct:A choice table for interest tables from 0% to 100%
(a)
Expert Solution
Answer to Problem 35P
From table below, from 0% to 6%, Plan B should be preferred. Between 7% to 12% Plan C should be preferred. Beyond that Plan A should be selected
Explanation of Solution
NPV of Plan B
NPV of Plan C
Choice table for interest from 0% to 100%
| Interest rate | (P/A,i,15) | (P/F,i,15) | Plan A | Plan B | Plan C |
| 0% | 15.00 | 1.00 | 314,500 | 401,250 | 353,000 |
| 1% | 13.87 | 0.86 | 277,491 | 349,203 | 310,657 |
| 2% | 12.85 | 0.74 | 244,656 | 302,909 | 273,048 |
| 3% | 11.94 | 0.64 | 215,448 | 261,626 | 239,557 |
| 4% | 11.12 | 0.56 | 189,400 | 224,719 | 209,657 |
| 5% | 10.38 | 0.48 | 166,112 | 191,642 | 182,896 |
| 6% | 9.71 | 0.42 | 145,238 | 161,925 | 158,885 |
| 7% | 9.11 | 0.36 | 126,482 | 135,162 | 137,289 |
| 8% | 8.56 | 0.32 | 109,588 | 111,001 | 117,818 |
| 9% | 8.06 | 0.27 | 94,335 | 89,139 | 100,220 |
| 10% | 7.61 | 0.24 | 80,531 | 69,311 | 84,279 |
| 11% | 7.19 | 0.21 | 68,008 | 51,287 | 69,805 |
| 12% | 6.81 | 0.18 | 56,623 | 34,867 | 56,634 |
| 13% | 6.46 | 0.16 | 46,248 | 19,874 | 44,621 |
| 14% | 6.14 | 0.14 | 36,772 | 6,156 | 33,640 |
| 15% | 5.85 | 0.12 | 28,100 | (6,422) | 23,583 |
| 16% | 5.58 | 0.11 | 20,146 | (17,979) | 14,351 |
| 17% | 5.32 | 0.09 | 12,835 | (28,619) | 5,859 |
| 18% | 5.09 | 0.08 | 6,103 | (38,434) | (1,967) |
| 19% | 4.88 | 0.07 | (110) | (47,505) | (9,194) |
| 20% | 4.68 | 0.06 | (5,855) | (55,905) | (15,880) |
| 21% | 4.49 | 0.06 | (11,176) | (63,697) | (22,078) |
| 22% | 4.32 | 0.05 | (16,114) | (70,938) | (27,833) |
| 23% | 4.15 | 0.04 | (20,705) | (77,678) | (33,186) |
| 24% | 4.00 | 0.04 | (24,981) | (83,964) | (38,175) |
| 25% | 3.86 | 0.04 | (28,970) | (89,835) | (42,832) |
| 26% | 3.73 | 0.03 | (32,698) | (95,328) | (47,185) |
| 27% | 3.60 | 0.03 | (36,187) | (100,474) | (51,262) |
| 28% | 3.48 | 0.02 | (39,458) | (105,303) | (55,086) |
| 29% | 3.37 | 0.02 | (42,528) | (109,841) | (58,677) |
| 30% | 3.27 | 0.02 | (45,416) | (114,112) | (62,055) |
| 31% | 3.17 | 0.02 | (48,134) | (118,137) | (65,237) |
| 32% | 3.08 | 0.02 | (50,697) | (121,934) | (68,238) |
| 33% | 2.99 | 0.01 | (53,117) | (125,523) | (71,073) |
| 34% | 2.90 | 0.01 | (55,405) | (128,918) | (73,753) |
| 35% | 2.83 | 0.01 | (57,571) | (132,134) | (76,291) |
| 36% | 2.75 | 0.01 | (59,623) | (135,183) | (78,697) |
| 37% | 2.68 | 0.01 | (61,571) | (138,078) | (80,981) |
| 38% | 2.61 | 0.01 | (63,421) | (140,830) | (83,151) |
| 39% | 2.55 | 0.01 | (65,180) | (143,449) | (85,215) |
| 40% | 2.48 | 0.01 | (66,854) | (145,942) | (87,180) |
| 41% | 2.42 | 0.01 | (68,450) | (148,320) | (89,053) |
| 42% | 2.37 | 0.01 | (69,973) | (150,589) | (90,840) |
| 43% | 2.31 | 0.00 | (71,426) | (152,757) | (92,547) |
| 44% | 2.26 | 0.00 | (72,816) | (154,829) | (94,179) |
| 45% | 2.21 | 0.00 | (74,145) | (156,812) | (95,740) |
| 46% | 2.17 | 0.00 | (75,417) | (158,712) | (97,235) |
| 47% | 2.12 | 0.00 | (76,637) | (160,532) | (98,668) |
| 48% | 2.08 | 0.00 | (77,806) | (162,279) | (100,042) |
| 49% | 2.04 | 0.00 | (78,929) | (163,956) | (101,361) |
| 50% | 2.00 | 0.00 | (80,007) | (165,567) | (102,628) |
| 51% | 1.96 | 0.00 | (81,043) | (167,117) | (103,847) |
| 52% | 1.92 | 0.00 | (82,040) | (168,607) | (105,019) |
| 53% | 1.88 | 0.00 | (83,000) | (170,042) | (106,147) |
| 54% | 1.85 | 0.00 | (83,925) | (171,425) | (107,234) |
| 55% | 1.82 | 0.00 | (84,816) | (172,758) | (108,282) |
| 56% | 1.78 | 0.00 | (85,675) | (174,044) | (109,293) |
| 57% | 1.75 | 0.00 | (86,505) | (175,286) | (110,269) |
| 58% | 1.72 | 0.00 | (87,306) | (176,485) | (111,211) |
| 59% | 1.69 | 0.00 | (88,080) | (177,644) | (112,121) |
| 60% | 1.67 | 0.00 | (88,828) | (178,764) | (113,002) |
| 61% | 1.64 | 0.00 | (89,552) | (179,848) | (113,853) |
| 62% | 1.61 | 0.00 | (90,253) | (180,897) | (114,678) |
| 63% | 1.59 | 0.00 | (90,931) | (181,913) | (115,476) |
| 64% | 1.56 | 0.00 | (91,589) | (182,898) | (116,249) |
| 65% | 1.54 | 0.00 | (92,226) | (183,852) | (116,999) |
| 66% | 1.51 | 0.00 | (92,844) | (184,778) | (117,726) |
| 67% | 1.49 | 0.00 | (93,443) | (185,676) | (118,431) |
| 68% | 1.47 | 0.00 | (94,025) | (186,548) | (119,116) |
| 69% | 1.45 | 0.00 | (94,590) | (187,394) | (119,781) |
| 70% | 1.43 | 0.00 | (95,139) | (188,217) | (120,427) |
| 71% | 1.41 | 0.00 | (95,672) | (189,016) | (121,054) |
| 72% | 1.39 | 0.00 | (96,191) | (189,793) | (121,665) |
| 73% | 1.37 | 0.00 | (96,695) | (190,549) | (122,258) |
| 74% | 1.35 | 0.00 | (97,186) | (191,285) | (122,836) |
| 75% | 1.33 | 0.00 | (97,663) | (192,001) | (123,398) |
| 76% | 1.32 | 0.00 | (98,128) | (192,698) | (123,946) |
| 77% | 1.30 | 0.00 | (98,581) | (193,377) | (124,479) |
| 78% | 1.28 | 0.00 | (99,023) | (194,039) | (124,998) |
| 79% | 1.27 | 0.00 | (99,453) | (194,684) | (125,505) |
| 80% | 1.25 | 0.00 | (99,872) | (195,312) | (125,998) |
| 81% | 1.23 | 0.00 | (100,282) | (195,926) | (126,480) |
| 82% | 1.22 | 0.00 | (100,681) | (196,524) | (126,950) |
| 83% | 1.20 | 0.00 | (101,070) | (197,108) | (127,408) |
| 84% | 1.19 | 0.00 | (101,450) | (197,678) | (127,856) |
| 85% | 1.18 | 0.00 | (101,822) | (198,235) | (128,293) |
| 86% | 1.16 | 0.00 | (102,184) | (198,779) | (128,720) |
| 87% | 1.15 | 0.00 | (102,539) | (199,310) | (129,137) |
| 88% | 1.14 | 0.00 | (102,885) | (199,829) | (129,544) |
| 89% | 1.12 | 0.00 | (103,223) | (200,337) | (129,943) |
| 90% | 1.11 | 0.00 | (103,554) | (200,833) | (130,332) |
| 91% | 1.10 | 0.00 | (103,878) | (201,318) | (130,713) |
| 92% | 1.09 | 0.00 | (104,194) | (201,793) | (131,086) |
| 93% | 1.08 | 0.00 | (104,504) | (202,258) | (131,451) |
| 94% | 1.06 | 0.00 | (104,807) | (202,712) | (131,808) |
| 95% | 1.05 | 0.00 | (105,104) | (203,158) | (132,157) |
| 96% | 1.04 | 0.00 | (105,395) | (203,593) | (132,499) |
| 97% | 1.03 | 0.00 | (105,680) | (204,020) | (132,834) |
| 98% | 1.02 | 0.00 | (105,958) | (204,438) | (133,163) |
| 99% | 1.01 | 0.00 | (106,232) | (204,848) | (133,484) |
| 100% | 1.00 | 0.00 | (106,499) | (205,250) | (133,799) |
(b)
To determine
To select:the best alternative at expected
(b)
Expert Solution
Answer to Problem 35P
Best alternative at expected rate of return of 10%isPlan A having highest NPV of $84,279.
Explanation of Solution
As per the choice table above, at expected rate of return of 10% Plan C has highest NPV of $84,279 as compared to other plans; hence Plan C should be preferred.
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Students have asked these similar questions
At the 8:10 café, there are equal numbers of two types of customers with the following values. The café owner cannot distinguish between the two types of students because many students without early classes arrive early anyway (that is she cannot price discriminate).
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Group
Value
Frequency
Baby boomers
$5
20%
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$4
10%
Generation Y
$3
10%
`Tweeners
$2
10%
Seniors
$2
10%
Others
$0
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Your marketing department has identified the following customer demographics in the following table. Construct a demand curve and determine the profit maximizing price as well as the expected profit if MC=$1. The number of customers in the target population is 10,000.
Group
Value
Frequency
Baby boomers
$5
20%
Generation X
$4
10%
Generation Y
$3
10%
`Tweeners
$2
10%
Seniors
$2
10%
Others
$0
40%
ur marketing department has identified the following customer demographics in the following table. Construct a demand curve and determine the profit maximizing price as well as the expected profit if MC=$1. The number of customers in the target population is 10,000.
Chapter 8 Solutions
ENGR.ECONOMIC ANALYSIS
Ch. 8 - Prob. 1QTCCh. 8 - Prob. 2QTCCh. 8 - Prob. 3QTCCh. 8 - Prob. 4QTCCh. 8 - Prob. 5QTCCh. 8 - Prob. 1PCh. 8 - Prob. 2PCh. 8 - Prob. 3PCh. 8 - Prob. 4PCh. 8 - Prob. 5P
Ch. 8 - Prob. 6PCh. 8 - Prob. 7PCh. 8 - Prob. 8PCh. 8 - Prob. 9PCh. 8 - Prob. 10PCh. 8 - Prob. 11PCh. 8 - Prob. 12PCh. 8 - Prob. 13PCh. 8 - Prob. 14PCh. 8 - Prob. 15PCh. 8 - Prob. 16PCh. 8 - Prob. 17PCh. 8 - Prob. 18PCh. 8 - Prob. 19PCh. 8 - Prob. 20PCh. 8 - Prob. 21PCh. 8 - Prob. 22PCh. 8 - Prob. 23PCh. 8 - Prob. 24PCh. 8 - Prob. 25PCh. 8 - Prob. 26PCh. 8 - Prob. 27PCh. 8 - Prob. 28PCh. 8 - Prob. 29PCh. 8 - Prob. 30PCh. 8 - Prob. 31PCh. 8 - Prob. 32PCh. 8 - Prob. 33PCh. 8 - Prob. 34PCh. 8 - Prob. 35PCh. 8 - Prob. 36PCh. 8 - Prob. 37PCh. 8 - Prob. 38PCh. 8 - Prob. 39PCh. 8 - Prob. 40PCh. 8 - Prob. 41PCh. 8 - Prob. 42PCh. 8 - Prob. 43PCh. 8 - Prob. 44PCh. 8 - Prob. 45P
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