Choice Table whether to invest in X or Y or do nothing.

Question

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Answer 1

Question

Chapter 8, Problem 3P

To determine

Choice Table whether to invest in X or Y or do nothing.

Expert Solution & Answer

Answer to Problem 3P

At 0% investor will invest in Alternative B

From 1% to 49%, No investment will be done as net present value is negative

After 50% to 100%, investor will invest in Alternative A.

Explanation of Solution

Given information:

Interest Rate is from 0% to 100%.

Year	A	B
0	($10,000)	($15,000)
1--5	3200	4500

Year	Cash flow A	Cash flow B
0	-10,000	-15,000
1	3,000	4,500
2	3,000	4,500
3	3,000	4,500
4	3,000	4,500
5	3,000	4,500


Interest Rates	NPV- A	NPV- B	Do Nothing	Decision
0%	5,000	6,500	-	B
1%	-24500	-36000	-	Do Nothing
2%	-24000	-35500	-	Do Nothing
3%	-23500	-35000	-	Do Nothing
4%	-23000	-34500	-	Do Nothing
5%	-22500	-34000	-	Do Nothing
6%	-22000	-33500	-	Do Nothing
7%	-21500	-33000	-	Do Nothing
8%	-21000	-32500	-	Do Nothing
9%	-20500	-32000	-	Do Nothing
10%	-20000	-31500	-	Do Nothing
11%	-19500	-31000	-	Do Nothing
12%	-19000	-30500	-	Do Nothing
13%	-18500	-30000	-	Do Nothing
14%	-18000	-29500	-	Do Nothing
15%	-17500	-29000	-	Do Nothing
16%	-17000	-28500	-	Do Nothing
17%	-16500	-28000	-	Do Nothing
18%	-16000	-27500	-	Do Nothing
19%	-15500	-27000	-	Do Nothing
20%	-15000	-26500	-	Do Nothing
21%	-14500	-26000	-	Do Nothing
22%	-14000	-25500	-	Do Nothing
23%	-13500	-25000	-	Do Nothing
24%	-13000	-24500	-	Do Nothing
25%	-12500	-24000	-	Do Nothing
26%	-12000	-23500	-	Do Nothing
27%	-11500	-23000	-	Do Nothing
28%	-11000	-22500	-	Do Nothing
29%	-10500	-22000	-	Do Nothing
30%	-10000	-21500	-	Do Nothing
31%	-9500	-21000	-	Do Nothing
32%	-9000	-20500	-	Do Nothing
33%	-8500	-20000	-	Do Nothing
34%	-8000	-19500	-	Do Nothing
35%	-7500	-19000	-	Do Nothing
36%	-7000	-18500	-	Do Nothing
37%	-6500	-18000	-	Do Nothing
38%	-6000	-17500	-	Do Nothing
39%	-5500	-17000	-	Do Nothing
40%	-5000	-16500	-	Do Nothing
41%	-4500	-16000	-	Do Nothing
42%	-4000	-15500	-	Do Nothing
43%	-3500	-15000	-	Do Nothing
44%	-3000	-14500	-	Do Nothing
45%	-2500	-14000	-	Do Nothing
46%	-2000	-13500	-	Do Nothing
47%	-1500	-13000	-	Do Nothing
48%	-1000	-12500	-	Do Nothing
49%	-500	-12000	-	Do Nothing
50%	0	-11500	-	A
51%	500	-11000	-	A
52%	1000	-10500	-	A
53%	1500	-10000	-	A
54%	2000	-9500	-	A
55%	2500	-9000	-	A
56%	3000	-8500	-	A
57%	3500	-8000	-	A
58%	4000	-7500	-	A
59%	4500	-7000	-	A
60%	5000	-6500	-	A
61%	5500	-6000	-	A
62%	6000	-5500	-	A
63%	6500	-5000	-	A
64%	7000	-4500	-	A
65%	7500	-4000	-	A
66%	8000	-3500	-	A
67%	8500	-3000	-	A
68%	9000	-2500	-	A
69%	9500	-2000	-	A
70%	10000	-1500	-	A
71%	10500	-1000	-	A
72%	11000	-500	-	A
73%	11500	0	-	A
74%	12000	500	-	A
75%	12500	1000	-	A
76%	13000	1500	-	A
77%	13500	2000	-	A
78%	14000	2500	-	A
79%	14500	3000	-	A
80%	15000	3500	-	A
81%	15500	4000	-	A
82%	16000	4500	-	A
83%	16500	5000	-	A
84%	17000	5500	-	A
85%	17500	6000	-	A
86%	18000	6500	-	A
87%	18500	7000	-	A
88%	19000	7500	-	A
89%	19500	8000	-	A
90%	20000	8500	-	A
91%	20500	9000	-	A
92%	21000	9500	-	A
93%	21500	10000	-	A
94%	22000	10500	-	A
95%	22500	11000	-	A
96%	23000	11500	-	A
97%	23500	12000	-	A
98%	24000	12500	-	A
99%	24500	13000	-	A
100%	25000	13500	-	A
Year	Cash flow A	Cash flow B
0	-10,000	-15,000
1	3,000	4,500
2	3,000	4,500
3	3,000	4,500
4	3,000	4,500
5	3,000	4,500


Interest Rates	NPV- A	NPV- B	Do Nothing	Decision
0%	5,000	6,500	-	B
1%	-24500	-36000	-	Do Nothing
2%	-24000	-35500	-	Do Nothing
3%	-23500	-35000	-	Do Nothing
4%	-23000	-34500	-	Do Nothing
5%	-22500	-34000	-	Do Nothing
6%	-22000	-33500	-	Do Nothing
7%	-21500	-33000	-	Do Nothing
8%	-21000	-32500	-	Do Nothing
9%	-20500	-32000	-	Do Nothing
10%	-20000	-31500	-	Do Nothing
11%	-19500	-31000	-	Do Nothing
12%	-19000	-30500	-	Do Nothing
13%	-18500	-30000	-	Do Nothing
14%	-18000	-29500	-	Do Nothing
15%	-17500	-29000	-	Do Nothing
16%	-17000	-28500	-	Do Nothing
17%	-16500	-28000	-	Do Nothing
18%	-16000	-27500	-	Do Nothing
19%	-15500	-27000	-	Do Nothing
20%	-15000	-26500	-	Do Nothing
21%	-14500	-26000	-	Do Nothing
22%	-14000	-25500	-	Do Nothing
23%	-13500	-25000	-	Do Nothing
24%	-13000	-24500	-	Do Nothing
25%	-12500	-24000	-	Do Nothing
26%	-12000	-23500	-	Do Nothing
27%	-11500	-23000	-	Do Nothing
28%	-11000	-22500	-	Do Nothing
29%	-10500	-22000	-	Do Nothing
30%	-10000	-21500	-	Do Nothing
31%	-9500	-21000	-	Do Nothing
32%	-9000	-20500	-	Do Nothing
33%	-8500	-20000	-	Do Nothing
34%	-8000	-19500	-	Do Nothing
35%	-7500	-19000	-	Do Nothing
36%	-7000	-18500	-	Do Nothing
37%	-6500	-18000	-	Do Nothing
38%	-6000	-17500	-	Do Nothing
39%	-5500	-17000	-	Do Nothing
40%	-5000	-16500	-	Do Nothing
41%	-4500	-16000	-	Do Nothing
42%	-4000	-15500	-	Do Nothing
43%	-3500	-15000	-	Do Nothing
44%	-3000	-14500	-	Do Nothing
45%	-2500	-14000	-	Do Nothing
46%	-2000	-13500	-	Do Nothing
47%	-1500	-13000	-	Do Nothing
48%	-1000	-12500	-	Do Nothing
49%	-500	-12000	-	Do Nothing
50%	0	-11500	-	A
51%	500	-11000	-	A
52%	1000	-10500	-	A
53%	1500	-10000	-	A
54%	2000	-9500	-	A
55%	2500	-9000	-	A
56%	3000	-8500	-	A
57%	3500	-8000	-	A
58%	4000	-7500	-	A
59%	4500	-7000	-	A
60%	5000	-6500	-	A
61%	5500	-6000	-	A
62%	6000	-5500	-	A
63%	6500	-5000	-	A
64%	7000	-4500	-	A
65%	7500	-4000	-	A
66%	8000	-3500	-	A
67%	8500	-3000	-	A
68%	9000	-2500	-	A
69%	9500	-2000	-	A
70%	10000	-1500	-	A
71%	10500	-1000	-	A
72%	11000	-500	-	A
73%	11500	0	-	A
74%	12000	500	-	A
75%	12500	1000	-	A
76%	13000	1500	-	A
77%	13500	2000	-	A
78%	14000	2500	-	A
79%	14500	3000	-	A
80%	15000	3500	-	A
81%	15500	4000	-	A
82%	16000	4500	-	A
83%	16500	5000	-	A
84%	17000	5500	-	A
85%	17500	6000	-	A
86%	18000	6500	-	A
87%	18500	7000	-	A
88%	19000	7500	-	A
89%	19500	8000	-	A
90%	20000	8500	-	A
91%	20500	9000	-	A
92%	21000	9500	-	A
93%	21500	10000	-	A
94%	22000	10500	-	A
95%	22500	11000	-	A
96%	23000	11500	-	A
97%	23500	12000	-	A
98%	24000	12500	-	A
99%	24500	13000	-	A
100%	25000	13500	-	A

Year	Cash flow A	Cash flow B
0	-10,000	-15,000
1	3,000	4,500
2	3,000	4,500
3	3,000	4,500
4	3,000	4,500
5	3,000	4,500


Interest Rates	NPV- A	NPV- B	Do Nothing	Decision
0%	5,000	6,500	-	B
1%	-24500	-36000	-	Do Nothing
2%	-24000	-35500	-	Do Nothing
3%	-23500	-35000	-	Do Nothing
4%	-23000	-34500	-	Do Nothing
5%	-22500	-34000	-	Do Nothing
6%	-22000	-33500	-	Do Nothing
7%	-21500	-33000	-	Do Nothing
8%	-21000	-32500	-	Do Nothing
9%	-20500	-32000	-	Do Nothing
10%	-20000	-31500	-	Do Nothing
11%	-19500	-31000	-	Do Nothing
12%	-19000	-30500	-	Do Nothing
13%	-18500	-30000	-	Do Nothing
14%	-18000	-29500	-	Do Nothing
15%	-17500	-29000	-	Do Nothing
16%	-17000	-28500	-	Do Nothing
17%	-16500	-28000	-	Do Nothing
18%	-16000	-27500	-	Do Nothing
19%	-15500	-27000	-	Do Nothing
20%	-15000	-26500	-	Do Nothing
21%	-14500	-26000	-	Do Nothing
22%	-14000	-25500	-	Do Nothing
23%	-13500	-25000	-	Do Nothing
24%	-13000	-24500	-	Do Nothing
25%	-12500	-24000	-	Do Nothing
26%	-12000	-23500	-	Do Nothing
27%	-11500	-23000	-	Do Nothing
28%	-11000	-22500	-	Do Nothing
29%	-10500	-22000	-	Do Nothing
30%	-10000	-21500	-	Do Nothing
31%	-9500	-21000	-	Do Nothing
32%	-9000	-20500	-	Do Nothing
33%	-8500	-20000	-	Do Nothing
34%	-8000	-19500	-	Do Nothing
35%	-7500	-19000	-	Do Nothing
36%	-7000	-18500	-	Do Nothing
37%	-6500	-18000	-	Do Nothing
38%	-6000	-17500	-	Do Nothing
39%	-5500	-17000	-	Do Nothing
40%	-5000	-16500	-	Do Nothing
41%	-4500	-16000	-	Do Nothing
42%	-4000	-15500	-	Do Nothing
43%	-3500	-15000	-	Do Nothing
44%	-3000	-14500	-	Do Nothing
45%	-2500	-14000	-	Do Nothing
46%	-2000	-13500	-	Do Nothing
47%	-1500	-13000	-	Do Nothing
48%	-1000	-12500	-	Do Nothing
49%	-500	-12000	-	Do Nothing
50%	0	-11500	-	A
51%	500	-11000	-	A
52%	1000	-10500	-	A
53%	1500	-10000	-	A
54%	2000	-9500	-	A
55%	2500	-9000	-	A
56%	3000	-8500	-	A
57%	3500	-8000	-	A
58%	4000	-7500	-	A
59%	4500	-7000	-	A
60%	5000	-6500	-	A
61%	5500	-6000	-	A
62%	6000	-5500	-	A
63%	6500	-5000	-	A
64%	7000	-4500	-	A
65%	7500	-4000	-	A
66%	8000	-3500	-	A
67%	8500	-3000	-	A
68%	9000	-2500	-	A
69%	9500	-2000	-	A
70%	10000	-1500	-	A
71%	10500	-1000	-	A
72%	11000	-500	-	A
73%	11500	0	-	A
74%	12000	500	-	A
75%	12500	1000	-	A
76%	13000	1500	-	A
77%	13500	2000	-	A
78%	14000	2500	-	A
79%	14500	3000	-	A
80%	15000	3500	-	A
81%	15500	4000	-	A
82%	16000	4500	-	A
83%	16500	5000	-	A
84%	17000	5500	-	A
85%	17500	6000	-	A
86%	18000	6500	-	A
87%	18500	7000	-	A
88%	19000	7500	-	A
89%	19500	8000	-	A
90%	20000	8500	-	A
91%	20500	9000	-	A
92%	21000	9500	-	A
93%	21500	10000	-	A
94%	22000	10500	-	A
95%	22500	11000	-	A
96%	23000	11500	-	A
97%	23500	12000	-	A
98%	24000	12500	-	A
99%	24500	13000	-	A
100%	25000	13500	-	A

Conclusion:

At 0% investor will invest in Alternative B

From 1% to 49%, No investment will be done as net present value is negative

After 50% to 100%, investor will invest in Alternative A.

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Answer 2

Question

Chapter 8, Problem 3P

To determine

Choice Table whether to invest in X or Y or do nothing.

Expert Solution & Answer

Answer to Problem 3P

At 0% investor will invest in Alternative B

From 1% to 49%, No investment will be done as net present value is negative

After 50% to 100%, investor will invest in Alternative A.

Explanation of Solution

Given information:

Interest Rate is from 0% to 100%.

Year	A	B
0	($10,000)	($15,000)
1--5	3200	4500

Year	Cash flow A	Cash flow B
0	-10,000	-15,000
1	3,000	4,500
2	3,000	4,500
3	3,000	4,500
4	3,000	4,500
5	3,000	4,500


Interest Rates	NPV- A	NPV- B	Do Nothing	Decision
0%	5,000	6,500	-	B
1%	-24500	-36000	-	Do Nothing
2%	-24000	-35500	-	Do Nothing
3%	-23500	-35000	-	Do Nothing
4%	-23000	-34500	-	Do Nothing
5%	-22500	-34000	-	Do Nothing
6%	-22000	-33500	-	Do Nothing
7%	-21500	-33000	-	Do Nothing
8%	-21000	-32500	-	Do Nothing
9%	-20500	-32000	-	Do Nothing
10%	-20000	-31500	-	Do Nothing
11%	-19500	-31000	-	Do Nothing
12%	-19000	-30500	-	Do Nothing
13%	-18500	-30000	-	Do Nothing
14%	-18000	-29500	-	Do Nothing
15%	-17500	-29000	-	Do Nothing
16%	-17000	-28500	-	Do Nothing
17%	-16500	-28000	-	Do Nothing
18%	-16000	-27500	-	Do Nothing
19%	-15500	-27000	-	Do Nothing
20%	-15000	-26500	-	Do Nothing
21%	-14500	-26000	-	Do Nothing
22%	-14000	-25500	-	Do Nothing
23%	-13500	-25000	-	Do Nothing
24%	-13000	-24500	-	Do Nothing
25%	-12500	-24000	-	Do Nothing
26%	-12000	-23500	-	Do Nothing
27%	-11500	-23000	-	Do Nothing
28%	-11000	-22500	-	Do Nothing
29%	-10500	-22000	-	Do Nothing
30%	-10000	-21500	-	Do Nothing
31%	-9500	-21000	-	Do Nothing
32%	-9000	-20500	-	Do Nothing
33%	-8500	-20000	-	Do Nothing
34%	-8000	-19500	-	Do Nothing
35%	-7500	-19000	-	Do Nothing
36%	-7000	-18500	-	Do Nothing
37%	-6500	-18000	-	Do Nothing
38%	-6000	-17500	-	Do Nothing
39%	-5500	-17000	-	Do Nothing
40%	-5000	-16500	-	Do Nothing
41%	-4500	-16000	-	Do Nothing
42%	-4000	-15500	-	Do Nothing
43%	-3500	-15000	-	Do Nothing
44%	-3000	-14500	-	Do Nothing
45%	-2500	-14000	-	Do Nothing
46%	-2000	-13500	-	Do Nothing
47%	-1500	-13000	-	Do Nothing
48%	-1000	-12500	-	Do Nothing
49%	-500	-12000	-	Do Nothing
50%	0	-11500	-	A
51%	500	-11000	-	A
52%	1000	-10500	-	A
53%	1500	-10000	-	A
54%	2000	-9500	-	A
55%	2500	-9000	-	A
56%	3000	-8500	-	A
57%	3500	-8000	-	A
58%	4000	-7500	-	A
59%	4500	-7000	-	A
60%	5000	-6500	-	A
61%	5500	-6000	-	A
62%	6000	-5500	-	A
63%	6500	-5000	-	A
64%	7000	-4500	-	A
65%	7500	-4000	-	A
66%	8000	-3500	-	A
67%	8500	-3000	-	A
68%	9000	-2500	-	A
69%	9500	-2000	-	A
70%	10000	-1500	-	A
71%	10500	-1000	-	A
72%	11000	-500	-	A
73%	11500	0	-	A
74%	12000	500	-	A
75%	12500	1000	-	A
76%	13000	1500	-	A
77%	13500	2000	-	A
78%	14000	2500	-	A
79%	14500	3000	-	A
80%	15000	3500	-	A
81%	15500	4000	-	A
82%	16000	4500	-	A
83%	16500	5000	-	A
84%	17000	5500	-	A
85%	17500	6000	-	A
86%	18000	6500	-	A
87%	18500	7000	-	A
88%	19000	7500	-	A
89%	19500	8000	-	A
90%	20000	8500	-	A
91%	20500	9000	-	A
92%	21000	9500	-	A
93%	21500	10000	-	A
94%	22000	10500	-	A
95%	22500	11000	-	A
96%	23000	11500	-	A
97%	23500	12000	-	A
98%	24000	12500	-	A
99%	24500	13000	-	A
100%	25000	13500	-	A
Year	Cash flow A	Cash flow B
0	-10,000	-15,000
1	3,000	4,500
2	3,000	4,500
3	3,000	4,500
4	3,000	4,500
5	3,000	4,500


Interest Rates	NPV- A	NPV- B	Do Nothing	Decision
0%	5,000	6,500	-	B
1%	-24500	-36000	-	Do Nothing
2%	-24000	-35500	-	Do Nothing
3%	-23500	-35000	-	Do Nothing
4%	-23000	-34500	-	Do Nothing
5%	-22500	-34000	-	Do Nothing
6%	-22000	-33500	-	Do Nothing
7%	-21500	-33000	-	Do Nothing
8%	-21000	-32500	-	Do Nothing
9%	-20500	-32000	-	Do Nothing
10%	-20000	-31500	-	Do Nothing
11%	-19500	-31000	-	Do Nothing
12%	-19000	-30500	-	Do Nothing
13%	-18500	-30000	-	Do Nothing
14%	-18000	-29500	-	Do Nothing
15%	-17500	-29000	-	Do Nothing
16%	-17000	-28500	-	Do Nothing
17%	-16500	-28000	-	Do Nothing
18%	-16000	-27500	-	Do Nothing
19%	-15500	-27000	-	Do Nothing
20%	-15000	-26500	-	Do Nothing
21%	-14500	-26000	-	Do Nothing
22%	-14000	-25500	-	Do Nothing
23%	-13500	-25000	-	Do Nothing
24%	-13000	-24500	-	Do Nothing
25%	-12500	-24000	-	Do Nothing
26%	-12000	-23500	-	Do Nothing
27%	-11500	-23000	-	Do Nothing
28%	-11000	-22500	-	Do Nothing
29%	-10500	-22000	-	Do Nothing
30%	-10000	-21500	-	Do Nothing
31%	-9500	-21000	-	Do Nothing
32%	-9000	-20500	-	Do Nothing
33%	-8500	-20000	-	Do Nothing
34%	-8000	-19500	-	Do Nothing
35%	-7500	-19000	-	Do Nothing
36%	-7000	-18500	-	Do Nothing
37%	-6500	-18000	-	Do Nothing
38%	-6000	-17500	-	Do Nothing
39%	-5500	-17000	-	Do Nothing
40%	-5000	-16500	-	Do Nothing
41%	-4500	-16000	-	Do Nothing
42%	-4000	-15500	-	Do Nothing
43%	-3500	-15000	-	Do Nothing
44%	-3000	-14500	-	Do Nothing
45%	-2500	-14000	-	Do Nothing
46%	-2000	-13500	-	Do Nothing
47%	-1500	-13000	-	Do Nothing
48%	-1000	-12500	-	Do Nothing
49%	-500	-12000	-	Do Nothing
50%	0	-11500	-	A
51%	500	-11000	-	A
52%	1000	-10500	-	A
53%	1500	-10000	-	A
54%	2000	-9500	-	A
55%	2500	-9000	-	A
56%	3000	-8500	-	A
57%	3500	-8000	-	A
58%	4000	-7500	-	A
59%	4500	-7000	-	A
60%	5000	-6500	-	A
61%	5500	-6000	-	A
62%	6000	-5500	-	A
63%	6500	-5000	-	A
64%	7000	-4500	-	A
65%	7500	-4000	-	A
66%	8000	-3500	-	A
67%	8500	-3000	-	A
68%	9000	-2500	-	A
69%	9500	-2000	-	A
70%	10000	-1500	-	A
71%	10500	-1000	-	A
72%	11000	-500	-	A
73%	11500	0	-	A
74%	12000	500	-	A
75%	12500	1000	-	A
76%	13000	1500	-	A
77%	13500	2000	-	A
78%	14000	2500	-	A
79%	14500	3000	-	A
80%	15000	3500	-	A
81%	15500	4000	-	A
82%	16000	4500	-	A
83%	16500	5000	-	A
84%	17000	5500	-	A
85%	17500	6000	-	A
86%	18000	6500	-	A
87%	18500	7000	-	A
88%	19000	7500	-	A
89%	19500	8000	-	A
90%	20000	8500	-	A
91%	20500	9000	-	A
92%	21000	9500	-	A
93%	21500	10000	-	A
94%	22000	10500	-	A
95%	22500	11000	-	A
96%	23000	11500	-	A
97%	23500	12000	-	A
98%	24000	12500	-	A
99%	24500	13000	-	A
100%	25000	13500	-	A

Year	Cash flow A	Cash flow B
0	-10,000	-15,000
1	3,000	4,500
2	3,000	4,500
3	3,000	4,500
4	3,000	4,500
5	3,000	4,500


Interest Rates	NPV- A	NPV- B	Do Nothing	Decision
0%	5,000	6,500	-	B
1%	-24500	-36000	-	Do Nothing
2%	-24000	-35500	-	Do Nothing
3%	-23500	-35000	-	Do Nothing
4%	-23000	-34500	-	Do Nothing
5%	-22500	-34000	-	Do Nothing
6%	-22000	-33500	-	Do Nothing
7%	-21500	-33000	-	Do Nothing
8%	-21000	-32500	-	Do Nothing
9%	-20500	-32000	-	Do Nothing
10%	-20000	-31500	-	Do Nothing
11%	-19500	-31000	-	Do Nothing
12%	-19000	-30500	-	Do Nothing
13%	-18500	-30000	-	Do Nothing
14%	-18000	-29500	-	Do Nothing
15%	-17500	-29000	-	Do Nothing
16%	-17000	-28500	-	Do Nothing
17%	-16500	-28000	-	Do Nothing
18%	-16000	-27500	-	Do Nothing
19%	-15500	-27000	-	Do Nothing
20%	-15000	-26500	-	Do Nothing
21%	-14500	-26000	-	Do Nothing
22%	-14000	-25500	-	Do Nothing
23%	-13500	-25000	-	Do Nothing
24%	-13000	-24500	-	Do Nothing
25%	-12500	-24000	-	Do Nothing
26%	-12000	-23500	-	Do Nothing
27%	-11500	-23000	-	Do Nothing
28%	-11000	-22500	-	Do Nothing
29%	-10500	-22000	-	Do Nothing
30%	-10000	-21500	-	Do Nothing
31%	-9500	-21000	-	Do Nothing
32%	-9000	-20500	-	Do Nothing
33%	-8500	-20000	-	Do Nothing
34%	-8000	-19500	-	Do Nothing
35%	-7500	-19000	-	Do Nothing
36%	-7000	-18500	-	Do Nothing
37%	-6500	-18000	-	Do Nothing
38%	-6000	-17500	-	Do Nothing
39%	-5500	-17000	-	Do Nothing
40%	-5000	-16500	-	Do Nothing
41%	-4500	-16000	-	Do Nothing
42%	-4000	-15500	-	Do Nothing
43%	-3500	-15000	-	Do Nothing
44%	-3000	-14500	-	Do Nothing
45%	-2500	-14000	-	Do Nothing
46%	-2000	-13500	-	Do Nothing
47%	-1500	-13000	-	Do Nothing
48%	-1000	-12500	-	Do Nothing
49%	-500	-12000	-	Do Nothing
50%	0	-11500	-	A
51%	500	-11000	-	A
52%	1000	-10500	-	A
53%	1500	-10000	-	A
54%	2000	-9500	-	A
55%	2500	-9000	-	A
56%	3000	-8500	-	A
57%	3500	-8000	-	A
58%	4000	-7500	-	A
59%	4500	-7000	-	A
60%	5000	-6500	-	A
61%	5500	-6000	-	A
62%	6000	-5500	-	A
63%	6500	-5000	-	A
64%	7000	-4500	-	A
65%	7500	-4000	-	A
66%	8000	-3500	-	A
67%	8500	-3000	-	A
68%	9000	-2500	-	A
69%	9500	-2000	-	A
70%	10000	-1500	-	A
71%	10500	-1000	-	A
72%	11000	-500	-	A
73%	11500	0	-	A
74%	12000	500	-	A
75%	12500	1000	-	A
76%	13000	1500	-	A
77%	13500	2000	-	A
78%	14000	2500	-	A
79%	14500	3000	-	A
80%	15000	3500	-	A
81%	15500	4000	-	A
82%	16000	4500	-	A
83%	16500	5000	-	A
84%	17000	5500	-	A
85%	17500	6000	-	A
86%	18000	6500	-	A
87%	18500	7000	-	A
88%	19000	7500	-	A
89%	19500	8000	-	A
90%	20000	8500	-	A
91%	20500	9000	-	A
92%	21000	9500	-	A
93%	21500	10000	-	A
94%	22000	10500	-	A
95%	22500	11000	-	A
96%	23000	11500	-	A
97%	23500	12000	-	A
98%	24000	12500	-	A
99%	24500	13000	-	A
100%	25000	13500	-	A

Conclusion:

At 0% investor will invest in Alternative B

From 1% to 49%, No investment will be done as net present value is negative

After 50% to 100%, investor will invest in Alternative A.

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Answer 3

Question

Chapter 8, Problem 3P

To determine

Choice Table whether to invest in X or Y or do nothing.

Expert Solution & Answer

Answer to Problem 3P

At 0% investor will invest in Alternative B

From 1% to 49%, No investment will be done as net present value is negative

After 50% to 100%, investor will invest in Alternative A.

Explanation of Solution

Given information:

Interest Rate is from 0% to 100%.

Year	A	B
0	($10,000)	($15,000)
1--5	3200	4500

Year	Cash flow A	Cash flow B
0	-10,000	-15,000
1	3,000	4,500
2	3,000	4,500
3	3,000	4,500
4	3,000	4,500
5	3,000	4,500


Interest Rates	NPV- A	NPV- B	Do Nothing	Decision
0%	5,000	6,500	-	B
1%	-24500	-36000	-	Do Nothing
2%	-24000	-35500	-	Do Nothing
3%	-23500	-35000	-	Do Nothing
4%	-23000	-34500	-	Do Nothing
5%	-22500	-34000	-	Do Nothing
6%	-22000	-33500	-	Do Nothing
7%	-21500	-33000	-	Do Nothing
8%	-21000	-32500	-	Do Nothing
9%	-20500	-32000	-	Do Nothing
10%	-20000	-31500	-	Do Nothing
11%	-19500	-31000	-	Do Nothing
12%	-19000	-30500	-	Do Nothing
13%	-18500	-30000	-	Do Nothing
14%	-18000	-29500	-	Do Nothing
15%	-17500	-29000	-	Do Nothing
16%	-17000	-28500	-	Do Nothing
17%	-16500	-28000	-	Do Nothing
18%	-16000	-27500	-	Do Nothing
19%	-15500	-27000	-	Do Nothing
20%	-15000	-26500	-	Do Nothing
21%	-14500	-26000	-	Do Nothing
22%	-14000	-25500	-	Do Nothing
23%	-13500	-25000	-	Do Nothing
24%	-13000	-24500	-	Do Nothing
25%	-12500	-24000	-	Do Nothing
26%	-12000	-23500	-	Do Nothing
27%	-11500	-23000	-	Do Nothing
28%	-11000	-22500	-	Do Nothing
29%	-10500	-22000	-	Do Nothing
30%	-10000	-21500	-	Do Nothing
31%	-9500	-21000	-	Do Nothing
32%	-9000	-20500	-	Do Nothing
33%	-8500	-20000	-	Do Nothing
34%	-8000	-19500	-	Do Nothing
35%	-7500	-19000	-	Do Nothing
36%	-7000	-18500	-	Do Nothing
37%	-6500	-18000	-	Do Nothing
38%	-6000	-17500	-	Do Nothing
39%	-5500	-17000	-	Do Nothing
40%	-5000	-16500	-	Do Nothing
41%	-4500	-16000	-	Do Nothing
42%	-4000	-15500	-	Do Nothing
43%	-3500	-15000	-	Do Nothing
44%	-3000	-14500	-	Do Nothing
45%	-2500	-14000	-	Do Nothing
46%	-2000	-13500	-	Do Nothing
47%	-1500	-13000	-	Do Nothing
48%	-1000	-12500	-	Do Nothing
49%	-500	-12000	-	Do Nothing
50%	0	-11500	-	A
51%	500	-11000	-	A
52%	1000	-10500	-	A
53%	1500	-10000	-	A
54%	2000	-9500	-	A
55%	2500	-9000	-	A
56%	3000	-8500	-	A
57%	3500	-8000	-	A
58%	4000	-7500	-	A
59%	4500	-7000	-	A
60%	5000	-6500	-	A
61%	5500	-6000	-	A
62%	6000	-5500	-	A
63%	6500	-5000	-	A
64%	7000	-4500	-	A
65%	7500	-4000	-	A
66%	8000	-3500	-	A
67%	8500	-3000	-	A
68%	9000	-2500	-	A
69%	9500	-2000	-	A
70%	10000	-1500	-	A
71%	10500	-1000	-	A
72%	11000	-500	-	A
73%	11500	0	-	A
74%	12000	500	-	A
75%	12500	1000	-	A
76%	13000	1500	-	A
77%	13500	2000	-	A
78%	14000	2500	-	A
79%	14500	3000	-	A
80%	15000	3500	-	A
81%	15500	4000	-	A
82%	16000	4500	-	A
83%	16500	5000	-	A
84%	17000	5500	-	A
85%	17500	6000	-	A
86%	18000	6500	-	A
87%	18500	7000	-	A
88%	19000	7500	-	A
89%	19500	8000	-	A
90%	20000	8500	-	A
91%	20500	9000	-	A
92%	21000	9500	-	A
93%	21500	10000	-	A
94%	22000	10500	-	A
95%	22500	11000	-	A
96%	23000	11500	-	A
97%	23500	12000	-	A
98%	24000	12500	-	A
99%	24500	13000	-	A
100%	25000	13500	-	A
Year	Cash flow A	Cash flow B
0	-10,000	-15,000
1	3,000	4,500
2	3,000	4,500
3	3,000	4,500
4	3,000	4,500
5	3,000	4,500


Interest Rates	NPV- A	NPV- B	Do Nothing	Decision
0%	5,000	6,500	-	B
1%	-24500	-36000	-	Do Nothing
2%	-24000	-35500	-	Do Nothing
3%	-23500	-35000	-	Do Nothing
4%	-23000	-34500	-	Do Nothing
5%	-22500	-34000	-	Do Nothing
6%	-22000	-33500	-	Do Nothing
7%	-21500	-33000	-	Do Nothing
8%	-21000	-32500	-	Do Nothing
9%	-20500	-32000	-	Do Nothing
10%	-20000	-31500	-	Do Nothing
11%	-19500	-31000	-	Do Nothing
12%	-19000	-30500	-	Do Nothing
13%	-18500	-30000	-	Do Nothing
14%	-18000	-29500	-	Do Nothing
15%	-17500	-29000	-	Do Nothing
16%	-17000	-28500	-	Do Nothing
17%	-16500	-28000	-	Do Nothing
18%	-16000	-27500	-	Do Nothing
19%	-15500	-27000	-	Do Nothing
20%	-15000	-26500	-	Do Nothing
21%	-14500	-26000	-	Do Nothing
22%	-14000	-25500	-	Do Nothing
23%	-13500	-25000	-	Do Nothing
24%	-13000	-24500	-	Do Nothing
25%	-12500	-24000	-	Do Nothing
26%	-12000	-23500	-	Do Nothing
27%	-11500	-23000	-	Do Nothing
28%	-11000	-22500	-	Do Nothing
29%	-10500	-22000	-	Do Nothing
30%	-10000	-21500	-	Do Nothing
31%	-9500	-21000	-	Do Nothing
32%	-9000	-20500	-	Do Nothing
33%	-8500	-20000	-	Do Nothing
34%	-8000	-19500	-	Do Nothing
35%	-7500	-19000	-	Do Nothing
36%	-7000	-18500	-	Do Nothing
37%	-6500	-18000	-	Do Nothing
38%	-6000	-17500	-	Do Nothing
39%	-5500	-17000	-	Do Nothing
40%	-5000	-16500	-	Do Nothing
41%	-4500	-16000	-	Do Nothing
42%	-4000	-15500	-	Do Nothing
43%	-3500	-15000	-	Do Nothing
44%	-3000	-14500	-	Do Nothing
45%	-2500	-14000	-	Do Nothing
46%	-2000	-13500	-	Do Nothing
47%	-1500	-13000	-	Do Nothing
48%	-1000	-12500	-	Do Nothing
49%	-500	-12000	-	Do Nothing
50%	0	-11500	-	A
51%	500	-11000	-	A
52%	1000	-10500	-	A
53%	1500	-10000	-	A
54%	2000	-9500	-	A
55%	2500	-9000	-	A
56%	3000	-8500	-	A
57%	3500	-8000	-	A
58%	4000	-7500	-	A
59%	4500	-7000	-	A
60%	5000	-6500	-	A
61%	5500	-6000	-	A
62%	6000	-5500	-	A
63%	6500	-5000	-	A
64%	7000	-4500	-	A
65%	7500	-4000	-	A
66%	8000	-3500	-	A
67%	8500	-3000	-	A
68%	9000	-2500	-	A
69%	9500	-2000	-	A
70%	10000	-1500	-	A
71%	10500	-1000	-	A
72%	11000	-500	-	A
73%	11500	0	-	A
74%	12000	500	-	A
75%	12500	1000	-	A
76%	13000	1500	-	A
77%	13500	2000	-	A
78%	14000	2500	-	A
79%	14500	3000	-	A
80%	15000	3500	-	A
81%	15500	4000	-	A
82%	16000	4500	-	A
83%	16500	5000	-	A
84%	17000	5500	-	A
85%	17500	6000	-	A
86%	18000	6500	-	A
87%	18500	7000	-	A
88%	19000	7500	-	A
89%	19500	8000	-	A
90%	20000	8500	-	A
91%	20500	9000	-	A
92%	21000	9500	-	A
93%	21500	10000	-	A
94%	22000	10500	-	A
95%	22500	11000	-	A
96%	23000	11500	-	A
97%	23500	12000	-	A
98%	24000	12500	-	A
99%	24500	13000	-	A
100%	25000	13500	-	A

Year	Cash flow A	Cash flow B
0	-10,000	-15,000
1	3,000	4,500
2	3,000	4,500
3	3,000	4,500
4	3,000	4,500
5	3,000	4,500


Interest Rates	NPV- A	NPV- B	Do Nothing	Decision
0%	5,000	6,500	-	B
1%	-24500	-36000	-	Do Nothing
2%	-24000	-35500	-	Do Nothing
3%	-23500	-35000	-	Do Nothing
4%	-23000	-34500	-	Do Nothing
5%	-22500	-34000	-	Do Nothing
6%	-22000	-33500	-	Do Nothing
7%	-21500	-33000	-	Do Nothing
8%	-21000	-32500	-	Do Nothing
9%	-20500	-32000	-	Do Nothing
10%	-20000	-31500	-	Do Nothing
11%	-19500	-31000	-	Do Nothing
12%	-19000	-30500	-	Do Nothing
13%	-18500	-30000	-	Do Nothing
14%	-18000	-29500	-	Do Nothing
15%	-17500	-29000	-	Do Nothing
16%	-17000	-28500	-	Do Nothing
17%	-16500	-28000	-	Do Nothing
18%	-16000	-27500	-	Do Nothing
19%	-15500	-27000	-	Do Nothing
20%	-15000	-26500	-	Do Nothing
21%	-14500	-26000	-	Do Nothing
22%	-14000	-25500	-	Do Nothing
23%	-13500	-25000	-	Do Nothing
24%	-13000	-24500	-	Do Nothing
25%	-12500	-24000	-	Do Nothing
26%	-12000	-23500	-	Do Nothing
27%	-11500	-23000	-	Do Nothing
28%	-11000	-22500	-	Do Nothing
29%	-10500	-22000	-	Do Nothing
30%	-10000	-21500	-	Do Nothing
31%	-9500	-21000	-	Do Nothing
32%	-9000	-20500	-	Do Nothing
33%	-8500	-20000	-	Do Nothing
34%	-8000	-19500	-	Do Nothing
35%	-7500	-19000	-	Do Nothing
36%	-7000	-18500	-	Do Nothing
37%	-6500	-18000	-	Do Nothing
38%	-6000	-17500	-	Do Nothing
39%	-5500	-17000	-	Do Nothing
40%	-5000	-16500	-	Do Nothing
41%	-4500	-16000	-	Do Nothing
42%	-4000	-15500	-	Do Nothing
43%	-3500	-15000	-	Do Nothing
44%	-3000	-14500	-	Do Nothing
45%	-2500	-14000	-	Do Nothing
46%	-2000	-13500	-	Do Nothing
47%	-1500	-13000	-	Do Nothing
48%	-1000	-12500	-	Do Nothing
49%	-500	-12000	-	Do Nothing
50%	0	-11500	-	A
51%	500	-11000	-	A
52%	1000	-10500	-	A
53%	1500	-10000	-	A
54%	2000	-9500	-	A
55%	2500	-9000	-	A
56%	3000	-8500	-	A
57%	3500	-8000	-	A
58%	4000	-7500	-	A
59%	4500	-7000	-	A
60%	5000	-6500	-	A
61%	5500	-6000	-	A
62%	6000	-5500	-	A
63%	6500	-5000	-	A
64%	7000	-4500	-	A
65%	7500	-4000	-	A
66%	8000	-3500	-	A
67%	8500	-3000	-	A
68%	9000	-2500	-	A
69%	9500	-2000	-	A
70%	10000	-1500	-	A
71%	10500	-1000	-	A
72%	11000	-500	-	A
73%	11500	0	-	A
74%	12000	500	-	A
75%	12500	1000	-	A
76%	13000	1500	-	A
77%	13500	2000	-	A
78%	14000	2500	-	A
79%	14500	3000	-	A
80%	15000	3500	-	A
81%	15500	4000	-	A
82%	16000	4500	-	A
83%	16500	5000	-	A
84%	17000	5500	-	A
85%	17500	6000	-	A
86%	18000	6500	-	A
87%	18500	7000	-	A
88%	19000	7500	-	A
89%	19500	8000	-	A
90%	20000	8500	-	A
91%	20500	9000	-	A
92%	21000	9500	-	A
93%	21500	10000	-	A
94%	22000	10500	-	A
95%	22500	11000	-	A
96%	23000	11500	-	A
97%	23500	12000	-	A
98%	24000	12500	-	A
99%	24500	13000	-	A
100%	25000	13500	-	A

Conclusion:

At 0% investor will invest in Alternative B

From 1% to 49%, No investment will be done as net present value is negative

After 50% to 100%, investor will invest in Alternative A.

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Answer 4

Question

Chapter 8, Problem 3P

To determine

Choice Table whether to invest in X or Y or do nothing.

Expert Solution & Answer

Answer to Problem 3P

At 0% investor will invest in Alternative B

From 1% to 49%, No investment will be done as net present value is negative

After 50% to 100%, investor will invest in Alternative A.

Explanation of Solution

Given information:

Interest Rate is from 0% to 100%.

Year	A	B
0	($10,000)	($15,000)
1--5	3200	4500

Year	Cash flow A	Cash flow B
0	-10,000	-15,000
1	3,000	4,500
2	3,000	4,500
3	3,000	4,500
4	3,000	4,500
5	3,000	4,500


Interest Rates	NPV- A	NPV- B	Do Nothing	Decision
0%	5,000	6,500	-	B
1%	-24500	-36000	-	Do Nothing
2%	-24000	-35500	-	Do Nothing
3%	-23500	-35000	-	Do Nothing
4%	-23000	-34500	-	Do Nothing
5%	-22500	-34000	-	Do Nothing
6%	-22000	-33500	-	Do Nothing
7%	-21500	-33000	-	Do Nothing
8%	-21000	-32500	-	Do Nothing
9%	-20500	-32000	-	Do Nothing
10%	-20000	-31500	-	Do Nothing
11%	-19500	-31000	-	Do Nothing
12%	-19000	-30500	-	Do Nothing
13%	-18500	-30000	-	Do Nothing
14%	-18000	-29500	-	Do Nothing
15%	-17500	-29000	-	Do Nothing
16%	-17000	-28500	-	Do Nothing
17%	-16500	-28000	-	Do Nothing
18%	-16000	-27500	-	Do Nothing
19%	-15500	-27000	-	Do Nothing
20%	-15000	-26500	-	Do Nothing
21%	-14500	-26000	-	Do Nothing
22%	-14000	-25500	-	Do Nothing
23%	-13500	-25000	-	Do Nothing
24%	-13000	-24500	-	Do Nothing
25%	-12500	-24000	-	Do Nothing
26%	-12000	-23500	-	Do Nothing
27%	-11500	-23000	-	Do Nothing
28%	-11000	-22500	-	Do Nothing
29%	-10500	-22000	-	Do Nothing
30%	-10000	-21500	-	Do Nothing
31%	-9500	-21000	-	Do Nothing
32%	-9000	-20500	-	Do Nothing
33%	-8500	-20000	-	Do Nothing
34%	-8000	-19500	-	Do Nothing
35%	-7500	-19000	-	Do Nothing
36%	-7000	-18500	-	Do Nothing
37%	-6500	-18000	-	Do Nothing
38%	-6000	-17500	-	Do Nothing
39%	-5500	-17000	-	Do Nothing
40%	-5000	-16500	-	Do Nothing
41%	-4500	-16000	-	Do Nothing
42%	-4000	-15500	-	Do Nothing
43%	-3500	-15000	-	Do Nothing
44%	-3000	-14500	-	Do Nothing
45%	-2500	-14000	-	Do Nothing
46%	-2000	-13500	-	Do Nothing
47%	-1500	-13000	-	Do Nothing
48%	-1000	-12500	-	Do Nothing
49%	-500	-12000	-	Do Nothing
50%	0	-11500	-	A
51%	500	-11000	-	A
52%	1000	-10500	-	A
53%	1500	-10000	-	A
54%	2000	-9500	-	A
55%	2500	-9000	-	A
56%	3000	-8500	-	A
57%	3500	-8000	-	A
58%	4000	-7500	-	A
59%	4500	-7000	-	A
60%	5000	-6500	-	A
61%	5500	-6000	-	A
62%	6000	-5500	-	A
63%	6500	-5000	-	A
64%	7000	-4500	-	A
65%	7500	-4000	-	A
66%	8000	-3500	-	A
67%	8500	-3000	-	A
68%	9000	-2500	-	A
69%	9500	-2000	-	A
70%	10000	-1500	-	A
71%	10500	-1000	-	A
72%	11000	-500	-	A
73%	11500	0	-	A
74%	12000	500	-	A
75%	12500	1000	-	A
76%	13000	1500	-	A
77%	13500	2000	-	A
78%	14000	2500	-	A
79%	14500	3000	-	A
80%	15000	3500	-	A
81%	15500	4000	-	A
82%	16000	4500	-	A
83%	16500	5000	-	A
84%	17000	5500	-	A
85%	17500	6000	-	A
86%	18000	6500	-	A
87%	18500	7000	-	A
88%	19000	7500	-	A
89%	19500	8000	-	A
90%	20000	8500	-	A
91%	20500	9000	-	A
92%	21000	9500	-	A
93%	21500	10000	-	A
94%	22000	10500	-	A
95%	22500	11000	-	A
96%	23000	11500	-	A
97%	23500	12000	-	A
98%	24000	12500	-	A
99%	24500	13000	-	A
100%	25000	13500	-	A
Year	Cash flow A	Cash flow B
0	-10,000	-15,000
1	3,000	4,500
2	3,000	4,500
3	3,000	4,500
4	3,000	4,500
5	3,000	4,500


Interest Rates	NPV- A	NPV- B	Do Nothing	Decision
0%	5,000	6,500	-	B
1%	-24500	-36000	-	Do Nothing
2%	-24000	-35500	-	Do Nothing
3%	-23500	-35000	-	Do Nothing
4%	-23000	-34500	-	Do Nothing
5%	-22500	-34000	-	Do Nothing
6%	-22000	-33500	-	Do Nothing
7%	-21500	-33000	-	Do Nothing
8%	-21000	-32500	-	Do Nothing
9%	-20500	-32000	-	Do Nothing
10%	-20000	-31500	-	Do Nothing
11%	-19500	-31000	-	Do Nothing
12%	-19000	-30500	-	Do Nothing
13%	-18500	-30000	-	Do Nothing
14%	-18000	-29500	-	Do Nothing
15%	-17500	-29000	-	Do Nothing
16%	-17000	-28500	-	Do Nothing
17%	-16500	-28000	-	Do Nothing
18%	-16000	-27500	-	Do Nothing
19%	-15500	-27000	-	Do Nothing
20%	-15000	-26500	-	Do Nothing
21%	-14500	-26000	-	Do Nothing
22%	-14000	-25500	-	Do Nothing
23%	-13500	-25000	-	Do Nothing
24%	-13000	-24500	-	Do Nothing
25%	-12500	-24000	-	Do Nothing
26%	-12000	-23500	-	Do Nothing
27%	-11500	-23000	-	Do Nothing
28%	-11000	-22500	-	Do Nothing
29%	-10500	-22000	-	Do Nothing
30%	-10000	-21500	-	Do Nothing
31%	-9500	-21000	-	Do Nothing
32%	-9000	-20500	-	Do Nothing
33%	-8500	-20000	-	Do Nothing
34%	-8000	-19500	-	Do Nothing
35%	-7500	-19000	-	Do Nothing
36%	-7000	-18500	-	Do Nothing
37%	-6500	-18000	-	Do Nothing
38%	-6000	-17500	-	Do Nothing
39%	-5500	-17000	-	Do Nothing
40%	-5000	-16500	-	Do Nothing
41%	-4500	-16000	-	Do Nothing
42%	-4000	-15500	-	Do Nothing
43%	-3500	-15000	-	Do Nothing
44%	-3000	-14500	-	Do Nothing
45%	-2500	-14000	-	Do Nothing
46%	-2000	-13500	-	Do Nothing
47%	-1500	-13000	-	Do Nothing
48%	-1000	-12500	-	Do Nothing
49%	-500	-12000	-	Do Nothing
50%	0	-11500	-	A
51%	500	-11000	-	A
52%	1000	-10500	-	A
53%	1500	-10000	-	A
54%	2000	-9500	-	A
55%	2500	-9000	-	A
56%	3000	-8500	-	A
57%	3500	-8000	-	A
58%	4000	-7500	-	A
59%	4500	-7000	-	A
60%	5000	-6500	-	A
61%	5500	-6000	-	A
62%	6000	-5500	-	A
63%	6500	-5000	-	A
64%	7000	-4500	-	A
65%	7500	-4000	-	A
66%	8000	-3500	-	A
67%	8500	-3000	-	A
68%	9000	-2500	-	A
69%	9500	-2000	-	A
70%	10000	-1500	-	A
71%	10500	-1000	-	A
72%	11000	-500	-	A
73%	11500	0	-	A
74%	12000	500	-	A
75%	12500	1000	-	A
76%	13000	1500	-	A
77%	13500	2000	-	A
78%	14000	2500	-	A
79%	14500	3000	-	A
80%	15000	3500	-	A
81%	15500	4000	-	A
82%	16000	4500	-	A
83%	16500	5000	-	A
84%	17000	5500	-	A
85%	17500	6000	-	A
86%	18000	6500	-	A
87%	18500	7000	-	A
88%	19000	7500	-	A
89%	19500	8000	-	A
90%	20000	8500	-	A
91%	20500	9000	-	A
92%	21000	9500	-	A
93%	21500	10000	-	A
94%	22000	10500	-	A
95%	22500	11000	-	A
96%	23000	11500	-	A
97%	23500	12000	-	A
98%	24000	12500	-	A
99%	24500	13000	-	A
100%	25000	13500	-	A

Year	Cash flow A	Cash flow B
0	-10,000	-15,000
1	3,000	4,500
2	3,000	4,500
3	3,000	4,500
4	3,000	4,500
5	3,000	4,500


Interest Rates	NPV- A	NPV- B	Do Nothing	Decision
0%	5,000	6,500	-	B
1%	-24500	-36000	-	Do Nothing
2%	-24000	-35500	-	Do Nothing
3%	-23500	-35000	-	Do Nothing
4%	-23000	-34500	-	Do Nothing
5%	-22500	-34000	-	Do Nothing
6%	-22000	-33500	-	Do Nothing
7%	-21500	-33000	-	Do Nothing
8%	-21000	-32500	-	Do Nothing
9%	-20500	-32000	-	Do Nothing
10%	-20000	-31500	-	Do Nothing
11%	-19500	-31000	-	Do Nothing
12%	-19000	-30500	-	Do Nothing
13%	-18500	-30000	-	Do Nothing
14%	-18000	-29500	-	Do Nothing
15%	-17500	-29000	-	Do Nothing
16%	-17000	-28500	-	Do Nothing
17%	-16500	-28000	-	Do Nothing
18%	-16000	-27500	-	Do Nothing
19%	-15500	-27000	-	Do Nothing
20%	-15000	-26500	-	Do Nothing
21%	-14500	-26000	-	Do Nothing
22%	-14000	-25500	-	Do Nothing
23%	-13500	-25000	-	Do Nothing
24%	-13000	-24500	-	Do Nothing
25%	-12500	-24000	-	Do Nothing
26%	-12000	-23500	-	Do Nothing
27%	-11500	-23000	-	Do Nothing
28%	-11000	-22500	-	Do Nothing
29%	-10500	-22000	-	Do Nothing
30%	-10000	-21500	-	Do Nothing
31%	-9500	-21000	-	Do Nothing
32%	-9000	-20500	-	Do Nothing
33%	-8500	-20000	-	Do Nothing
34%	-8000	-19500	-	Do Nothing
35%	-7500	-19000	-	Do Nothing
36%	-7000	-18500	-	Do Nothing
37%	-6500	-18000	-	Do Nothing
38%	-6000	-17500	-	Do Nothing
39%	-5500	-17000	-	Do Nothing
40%	-5000	-16500	-	Do Nothing
41%	-4500	-16000	-	Do Nothing
42%	-4000	-15500	-	Do Nothing
43%	-3500	-15000	-	Do Nothing
44%	-3000	-14500	-	Do Nothing
45%	-2500	-14000	-	Do Nothing
46%	-2000	-13500	-	Do Nothing
47%	-1500	-13000	-	Do Nothing
48%	-1000	-12500	-	Do Nothing
49%	-500	-12000	-	Do Nothing
50%	0	-11500	-	A
51%	500	-11000	-	A
52%	1000	-10500	-	A
53%	1500	-10000	-	A
54%	2000	-9500	-	A
55%	2500	-9000	-	A
56%	3000	-8500	-	A
57%	3500	-8000	-	A
58%	4000	-7500	-	A
59%	4500	-7000	-	A
60%	5000	-6500	-	A
61%	5500	-6000	-	A
62%	6000	-5500	-	A
63%	6500	-5000	-	A
64%	7000	-4500	-	A
65%	7500	-4000	-	A
66%	8000	-3500	-	A
67%	8500	-3000	-	A
68%	9000	-2500	-	A
69%	9500	-2000	-	A
70%	10000	-1500	-	A
71%	10500	-1000	-	A
72%	11000	-500	-	A
73%	11500	0	-	A
74%	12000	500	-	A
75%	12500	1000	-	A
76%	13000	1500	-	A
77%	13500	2000	-	A
78%	14000	2500	-	A
79%	14500	3000	-	A
80%	15000	3500	-	A
81%	15500	4000	-	A
82%	16000	4500	-	A
83%	16500	5000	-	A
84%	17000	5500	-	A
85%	17500	6000	-	A
86%	18000	6500	-	A
87%	18500	7000	-	A
88%	19000	7500	-	A
89%	19500	8000	-	A
90%	20000	8500	-	A
91%	20500	9000	-	A
92%	21000	9500	-	A
93%	21500	10000	-	A
94%	22000	10500	-	A
95%	22500	11000	-	A
96%	23000	11500	-	A
97%	23500	12000	-	A
98%	24000	12500	-	A
99%	24500	13000	-	A
100%	25000	13500	-	A

Conclusion:

At 0% investor will invest in Alternative B

From 1% to 49%, No investment will be done as net present value is negative

After 50% to 100%, investor will invest in Alternative A.

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Answer 5

Chapter 8, Problem 3P

To determine

Choice Table whether to invest in X or Y or do nothing.

Expert Solution & Answer

Answer to Problem 3P

At 0% investor will invest in Alternative B

From 1% to 49%, No investment will be done as net present value is negative

After 50% to 100%, investor will invest in Alternative A.

Explanation of Solution

Given information:

Interest Rate is from 0% to 100%.

Year	A	B
0	($10,000)	($15,000)
1--5	3200	4500

Year	Cash flow A	Cash flow B
0	-10,000	-15,000
1	3,000	4,500
2	3,000	4,500
3	3,000	4,500
4	3,000	4,500
5	3,000	4,500


Interest Rates	NPV- A	NPV- B	Do Nothing	Decision
0%	5,000	6,500	-	B
1%	-24500	-36000	-	Do Nothing
2%	-24000	-35500	-	Do Nothing
3%	-23500	-35000	-	Do Nothing
4%	-23000	-34500	-	Do Nothing
5%	-22500	-34000	-	Do Nothing
6%	-22000	-33500	-	Do Nothing
7%	-21500	-33000	-	Do Nothing
8%	-21000	-32500	-	Do Nothing
9%	-20500	-32000	-	Do Nothing
10%	-20000	-31500	-	Do Nothing
11%	-19500	-31000	-	Do Nothing
12%	-19000	-30500	-	Do Nothing
13%	-18500	-30000	-	Do Nothing
14%	-18000	-29500	-	Do Nothing
15%	-17500	-29000	-	Do Nothing
16%	-17000	-28500	-	Do Nothing
17%	-16500	-28000	-	Do Nothing
18%	-16000	-27500	-	Do Nothing
19%	-15500	-27000	-	Do Nothing
20%	-15000	-26500	-	Do Nothing
21%	-14500	-26000	-	Do Nothing
22%	-14000	-25500	-	Do Nothing
23%	-13500	-25000	-	Do Nothing
24%	-13000	-24500	-	Do Nothing
25%	-12500	-24000	-	Do Nothing
26%	-12000	-23500	-	Do Nothing
27%	-11500	-23000	-	Do Nothing
28%	-11000	-22500	-	Do Nothing
29%	-10500	-22000	-	Do Nothing
30%	-10000	-21500	-	Do Nothing
31%	-9500	-21000	-	Do Nothing
32%	-9000	-20500	-	Do Nothing
33%	-8500	-20000	-	Do Nothing
34%	-8000	-19500	-	Do Nothing
35%	-7500	-19000	-	Do Nothing
36%	-7000	-18500	-	Do Nothing
37%	-6500	-18000	-	Do Nothing
38%	-6000	-17500	-	Do Nothing
39%	-5500	-17000	-	Do Nothing
40%	-5000	-16500	-	Do Nothing
41%	-4500	-16000	-	Do Nothing
42%	-4000	-15500	-	Do Nothing
43%	-3500	-15000	-	Do Nothing
44%	-3000	-14500	-	Do Nothing
45%	-2500	-14000	-	Do Nothing
46%	-2000	-13500	-	Do Nothing
47%	-1500	-13000	-	Do Nothing
48%	-1000	-12500	-	Do Nothing
49%	-500	-12000	-	Do Nothing
50%	0	-11500	-	A
51%	500	-11000	-	A
52%	1000	-10500	-	A
53%	1500	-10000	-	A
54%	2000	-9500	-	A
55%	2500	-9000	-	A
56%	3000	-8500	-	A
57%	3500	-8000	-	A
58%	4000	-7500	-	A
59%	4500	-7000	-	A
60%	5000	-6500	-	A
61%	5500	-6000	-	A
62%	6000	-5500	-	A
63%	6500	-5000	-	A
64%	7000	-4500	-	A
65%	7500	-4000	-	A
66%	8000	-3500	-	A
67%	8500	-3000	-	A
68%	9000	-2500	-	A
69%	9500	-2000	-	A
70%	10000	-1500	-	A
71%	10500	-1000	-	A
72%	11000	-500	-	A
73%	11500	0	-	A
74%	12000	500	-	A
75%	12500	1000	-	A
76%	13000	1500	-	A
77%	13500	2000	-	A
78%	14000	2500	-	A
79%	14500	3000	-	A
80%	15000	3500	-	A
81%	15500	4000	-	A
82%	16000	4500	-	A
83%	16500	5000	-	A
84%	17000	5500	-	A
85%	17500	6000	-	A
86%	18000	6500	-	A
87%	18500	7000	-	A
88%	19000	7500	-	A
89%	19500	8000	-	A
90%	20000	8500	-	A
91%	20500	9000	-	A
92%	21000	9500	-	A
93%	21500	10000	-	A
94%	22000	10500	-	A
95%	22500	11000	-	A
96%	23000	11500	-	A
97%	23500	12000	-	A
98%	24000	12500	-	A
99%	24500	13000	-	A
100%	25000	13500	-	A
Year	Cash flow A	Cash flow B
0	-10,000	-15,000
1	3,000	4,500
2	3,000	4,500
3	3,000	4,500
4	3,000	4,500
5	3,000	4,500


Interest Rates	NPV- A	NPV- B	Do Nothing	Decision
0%	5,000	6,500	-	B
1%	-24500	-36000	-	Do Nothing
2%	-24000	-35500	-	Do Nothing
3%	-23500	-35000	-	Do Nothing
4%	-23000	-34500	-	Do Nothing
5%	-22500	-34000	-	Do Nothing
6%	-22000	-33500	-	Do Nothing
7%	-21500	-33000	-	Do Nothing
8%	-21000	-32500	-	Do Nothing
9%	-20500	-32000	-	Do Nothing
10%	-20000	-31500	-	Do Nothing
11%	-19500	-31000	-	Do Nothing
12%	-19000	-30500	-	Do Nothing
13%	-18500	-30000	-	Do Nothing
14%	-18000	-29500	-	Do Nothing
15%	-17500	-29000	-	Do Nothing
16%	-17000	-28500	-	Do Nothing
17%	-16500	-28000	-	Do Nothing
18%	-16000	-27500	-	Do Nothing
19%	-15500	-27000	-	Do Nothing
20%	-15000	-26500	-	Do Nothing
21%	-14500	-26000	-	Do Nothing
22%	-14000	-25500	-	Do Nothing
23%	-13500	-25000	-	Do Nothing
24%	-13000	-24500	-	Do Nothing
25%	-12500	-24000	-	Do Nothing
26%	-12000	-23500	-	Do Nothing
27%	-11500	-23000	-	Do Nothing
28%	-11000	-22500	-	Do Nothing
29%	-10500	-22000	-	Do Nothing
30%	-10000	-21500	-	Do Nothing
31%	-9500	-21000	-	Do Nothing
32%	-9000	-20500	-	Do Nothing
33%	-8500	-20000	-	Do Nothing
34%	-8000	-19500	-	Do Nothing
35%	-7500	-19000	-	Do Nothing
36%	-7000	-18500	-	Do Nothing
37%	-6500	-18000	-	Do Nothing
38%	-6000	-17500	-	Do Nothing
39%	-5500	-17000	-	Do Nothing
40%	-5000	-16500	-	Do Nothing
41%	-4500	-16000	-	Do Nothing
42%	-4000	-15500	-	Do Nothing
43%	-3500	-15000	-	Do Nothing
44%	-3000	-14500	-	Do Nothing
45%	-2500	-14000	-	Do Nothing
46%	-2000	-13500	-	Do Nothing
47%	-1500	-13000	-	Do Nothing
48%	-1000	-12500	-	Do Nothing
49%	-500	-12000	-	Do Nothing
50%	0	-11500	-	A
51%	500	-11000	-	A
52%	1000	-10500	-	A
53%	1500	-10000	-	A
54%	2000	-9500	-	A
55%	2500	-9000	-	A
56%	3000	-8500	-	A
57%	3500	-8000	-	A
58%	4000	-7500	-	A
59%	4500	-7000	-	A
60%	5000	-6500	-	A
61%	5500	-6000	-	A
62%	6000	-5500	-	A
63%	6500	-5000	-	A
64%	7000	-4500	-	A
65%	7500	-4000	-	A
66%	8000	-3500	-	A
67%	8500	-3000	-	A
68%	9000	-2500	-	A
69%	9500	-2000	-	A
70%	10000	-1500	-	A
71%	10500	-1000	-	A
72%	11000	-500	-	A
73%	11500	0	-	A
74%	12000	500	-	A
75%	12500	1000	-	A
76%	13000	1500	-	A
77%	13500	2000	-	A
78%	14000	2500	-	A
79%	14500	3000	-	A
80%	15000	3500	-	A
81%	15500	4000	-	A
82%	16000	4500	-	A
83%	16500	5000	-	A
84%	17000	5500	-	A
85%	17500	6000	-	A
86%	18000	6500	-	A
87%	18500	7000	-	A
88%	19000	7500	-	A
89%	19500	8000	-	A
90%	20000	8500	-	A
91%	20500	9000	-	A
92%	21000	9500	-	A
93%	21500	10000	-	A
94%	22000	10500	-	A
95%	22500	11000	-	A
96%	23000	11500	-	A
97%	23500	12000	-	A
98%	24000	12500	-	A
99%	24500	13000	-	A
100%	25000	13500	-	A

Year	Cash flow A	Cash flow B
0	-10,000	-15,000
1	3,000	4,500
2	3,000	4,500
3	3,000	4,500
4	3,000	4,500
5	3,000	4,500


Interest Rates	NPV- A	NPV- B	Do Nothing	Decision
0%	5,000	6,500	-	B
1%	-24500	-36000	-	Do Nothing
2%	-24000	-35500	-	Do Nothing
3%	-23500	-35000	-	Do Nothing
4%	-23000	-34500	-	Do Nothing
5%	-22500	-34000	-	Do Nothing
6%	-22000	-33500	-	Do Nothing
7%	-21500	-33000	-	Do Nothing
8%	-21000	-32500	-	Do Nothing
9%	-20500	-32000	-	Do Nothing
10%	-20000	-31500	-	Do Nothing
11%	-19500	-31000	-	Do Nothing
12%	-19000	-30500	-	Do Nothing
13%	-18500	-30000	-	Do Nothing
14%	-18000	-29500	-	Do Nothing
15%	-17500	-29000	-	Do Nothing
16%	-17000	-28500	-	Do Nothing
17%	-16500	-28000	-	Do Nothing
18%	-16000	-27500	-	Do Nothing
19%	-15500	-27000	-	Do Nothing
20%	-15000	-26500	-	Do Nothing
21%	-14500	-26000	-	Do Nothing
22%	-14000	-25500	-	Do Nothing
23%	-13500	-25000	-	Do Nothing
24%	-13000	-24500	-	Do Nothing
25%	-12500	-24000	-	Do Nothing
26%	-12000	-23500	-	Do Nothing
27%	-11500	-23000	-	Do Nothing
28%	-11000	-22500	-	Do Nothing
29%	-10500	-22000	-	Do Nothing
30%	-10000	-21500	-	Do Nothing
31%	-9500	-21000	-	Do Nothing
32%	-9000	-20500	-	Do Nothing
33%	-8500	-20000	-	Do Nothing
34%	-8000	-19500	-	Do Nothing
35%	-7500	-19000	-	Do Nothing
36%	-7000	-18500	-	Do Nothing
37%	-6500	-18000	-	Do Nothing
38%	-6000	-17500	-	Do Nothing
39%	-5500	-17000	-	Do Nothing
40%	-5000	-16500	-	Do Nothing
41%	-4500	-16000	-	Do Nothing
42%	-4000	-15500	-	Do Nothing
43%	-3500	-15000	-	Do Nothing
44%	-3000	-14500	-	Do Nothing
45%	-2500	-14000	-	Do Nothing
46%	-2000	-13500	-	Do Nothing
47%	-1500	-13000	-	Do Nothing
48%	-1000	-12500	-	Do Nothing
49%	-500	-12000	-	Do Nothing
50%	0	-11500	-	A
51%	500	-11000	-	A
52%	1000	-10500	-	A
53%	1500	-10000	-	A
54%	2000	-9500	-	A
55%	2500	-9000	-	A
56%	3000	-8500	-	A
57%	3500	-8000	-	A
58%	4000	-7500	-	A
59%	4500	-7000	-	A
60%	5000	-6500	-	A
61%	5500	-6000	-	A
62%	6000	-5500	-	A
63%	6500	-5000	-	A
64%	7000	-4500	-	A
65%	7500	-4000	-	A
66%	8000	-3500	-	A
67%	8500	-3000	-	A
68%	9000	-2500	-	A
69%	9500	-2000	-	A
70%	10000	-1500	-	A
71%	10500	-1000	-	A
72%	11000	-500	-	A
73%	11500	0	-	A
74%	12000	500	-	A
75%	12500	1000	-	A
76%	13000	1500	-	A
77%	13500	2000	-	A
78%	14000	2500	-	A
79%	14500	3000	-	A
80%	15000	3500	-	A
81%	15500	4000	-	A
82%	16000	4500	-	A
83%	16500	5000	-	A
84%	17000	5500	-	A
85%	17500	6000	-	A
86%	18000	6500	-	A
87%	18500	7000	-	A
88%	19000	7500	-	A
89%	19500	8000	-	A
90%	20000	8500	-	A
91%	20500	9000	-	A
92%	21000	9500	-	A
93%	21500	10000	-	A
94%	22000	10500	-	A
95%	22500	11000	-	A
96%	23000	11500	-	A
97%	23500	12000	-	A
98%	24000	12500	-	A
99%	24500	13000	-	A
100%	25000	13500	-	A

Conclusion:

At 0% investor will invest in Alternative B

From 1% to 49%, No investment will be done as net present value is negative

After 50% to 100%, investor will invest in Alternative A.

Answer 6

Chapter 8, Problem 3P

To determine

Choice Table whether to invest in X or Y or do nothing.

Expert Solution & Answer

Answer to Problem 3P

At 0% investor will invest in Alternative B

From 1% to 49%, No investment will be done as net present value is negative

After 50% to 100%, investor will invest in Alternative A.

Explanation of Solution

Given information:

Interest Rate is from 0% to 100%.

Year	A	B
0	($10,000)	($15,000)
1--5	3200	4500

Year	Cash flow A	Cash flow B
0	-10,000	-15,000
1	3,000	4,500
2	3,000	4,500
3	3,000	4,500
4	3,000	4,500
5	3,000	4,500


Interest Rates	NPV- A	NPV- B	Do Nothing	Decision
0%	5,000	6,500	-	B
1%	-24500	-36000	-	Do Nothing
2%	-24000	-35500	-	Do Nothing
3%	-23500	-35000	-	Do Nothing
4%	-23000	-34500	-	Do Nothing
5%	-22500	-34000	-	Do Nothing
6%	-22000	-33500	-	Do Nothing
7%	-21500	-33000	-	Do Nothing
8%	-21000	-32500	-	Do Nothing
9%	-20500	-32000	-	Do Nothing
10%	-20000	-31500	-	Do Nothing
11%	-19500	-31000	-	Do Nothing
12%	-19000	-30500	-	Do Nothing
13%	-18500	-30000	-	Do Nothing
14%	-18000	-29500	-	Do Nothing
15%	-17500	-29000	-	Do Nothing
16%	-17000	-28500	-	Do Nothing
17%	-16500	-28000	-	Do Nothing
18%	-16000	-27500	-	Do Nothing
19%	-15500	-27000	-	Do Nothing
20%	-15000	-26500	-	Do Nothing
21%	-14500	-26000	-	Do Nothing
22%	-14000	-25500	-	Do Nothing
23%	-13500	-25000	-	Do Nothing
24%	-13000	-24500	-	Do Nothing
25%	-12500	-24000	-	Do Nothing
26%	-12000	-23500	-	Do Nothing
27%	-11500	-23000	-	Do Nothing
28%	-11000	-22500	-	Do Nothing
29%	-10500	-22000	-	Do Nothing
30%	-10000	-21500	-	Do Nothing
31%	-9500	-21000	-	Do Nothing
32%	-9000	-20500	-	Do Nothing
33%	-8500	-20000	-	Do Nothing
34%	-8000	-19500	-	Do Nothing
35%	-7500	-19000	-	Do Nothing
36%	-7000	-18500	-	Do Nothing
37%	-6500	-18000	-	Do Nothing
38%	-6000	-17500	-	Do Nothing
39%	-5500	-17000	-	Do Nothing
40%	-5000	-16500	-	Do Nothing
41%	-4500	-16000	-	Do Nothing
42%	-4000	-15500	-	Do Nothing
43%	-3500	-15000	-	Do Nothing
44%	-3000	-14500	-	Do Nothing
45%	-2500	-14000	-	Do Nothing
46%	-2000	-13500	-	Do Nothing
47%	-1500	-13000	-	Do Nothing
48%	-1000	-12500	-	Do Nothing
49%	-500	-12000	-	Do Nothing
50%	0	-11500	-	A
51%	500	-11000	-	A
52%	1000	-10500	-	A
53%	1500	-10000	-	A
54%	2000	-9500	-	A
55%	2500	-9000	-	A
56%	3000	-8500	-	A
57%	3500	-8000	-	A
58%	4000	-7500	-	A
59%	4500	-7000	-	A
60%	5000	-6500	-	A
61%	5500	-6000	-	A
62%	6000	-5500	-	A
63%	6500	-5000	-	A
64%	7000	-4500	-	A
65%	7500	-4000	-	A
66%	8000	-3500	-	A
67%	8500	-3000	-	A
68%	9000	-2500	-	A
69%	9500	-2000	-	A
70%	10000	-1500	-	A
71%	10500	-1000	-	A
72%	11000	-500	-	A
73%	11500	0	-	A
74%	12000	500	-	A
75%	12500	1000	-	A
76%	13000	1500	-	A
77%	13500	2000	-	A
78%	14000	2500	-	A
79%	14500	3000	-	A
80%	15000	3500	-	A
81%	15500	4000	-	A
82%	16000	4500	-	A
83%	16500	5000	-	A
84%	17000	5500	-	A
85%	17500	6000	-	A
86%	18000	6500	-	A
87%	18500	7000	-	A
88%	19000	7500	-	A
89%	19500	8000	-	A
90%	20000	8500	-	A
91%	20500	9000	-	A
92%	21000	9500	-	A
93%	21500	10000	-	A
94%	22000	10500	-	A
95%	22500	11000	-	A
96%	23000	11500	-	A
97%	23500	12000	-	A
98%	24000	12500	-	A
99%	24500	13000	-	A
100%	25000	13500	-	A
Year	Cash flow A	Cash flow B
0	-10,000	-15,000
1	3,000	4,500
2	3,000	4,500
3	3,000	4,500
4	3,000	4,500
5	3,000	4,500


Interest Rates	NPV- A	NPV- B	Do Nothing	Decision
0%	5,000	6,500	-	B
1%	-24500	-36000	-	Do Nothing
2%	-24000	-35500	-	Do Nothing
3%	-23500	-35000	-	Do Nothing
4%	-23000	-34500	-	Do Nothing
5%	-22500	-34000	-	Do Nothing
6%	-22000	-33500	-	Do Nothing
7%	-21500	-33000	-	Do Nothing
8%	-21000	-32500	-	Do Nothing
9%	-20500	-32000	-	Do Nothing
10%	-20000	-31500	-	Do Nothing
11%	-19500	-31000	-	Do Nothing
12%	-19000	-30500	-	Do Nothing
13%	-18500	-30000	-	Do Nothing
14%	-18000	-29500	-	Do Nothing
15%	-17500	-29000	-	Do Nothing
16%	-17000	-28500	-	Do Nothing
17%	-16500	-28000	-	Do Nothing
18%	-16000	-27500	-	Do Nothing
19%	-15500	-27000	-	Do Nothing
20%	-15000	-26500	-	Do Nothing
21%	-14500	-26000	-	Do Nothing
22%	-14000	-25500	-	Do Nothing
23%	-13500	-25000	-	Do Nothing
24%	-13000	-24500	-	Do Nothing
25%	-12500	-24000	-	Do Nothing
26%	-12000	-23500	-	Do Nothing
27%	-11500	-23000	-	Do Nothing
28%	-11000	-22500	-	Do Nothing
29%	-10500	-22000	-	Do Nothing
30%	-10000	-21500	-	Do Nothing
31%	-9500	-21000	-	Do Nothing
32%	-9000	-20500	-	Do Nothing
33%	-8500	-20000	-	Do Nothing
34%	-8000	-19500	-	Do Nothing
35%	-7500	-19000	-	Do Nothing
36%	-7000	-18500	-	Do Nothing
37%	-6500	-18000	-	Do Nothing
38%	-6000	-17500	-	Do Nothing
39%	-5500	-17000	-	Do Nothing
40%	-5000	-16500	-	Do Nothing
41%	-4500	-16000	-	Do Nothing
42%	-4000	-15500	-	Do Nothing
43%	-3500	-15000	-	Do Nothing
44%	-3000	-14500	-	Do Nothing
45%	-2500	-14000	-	Do Nothing
46%	-2000	-13500	-	Do Nothing
47%	-1500	-13000	-	Do Nothing
48%	-1000	-12500	-	Do Nothing
49%	-500	-12000	-	Do Nothing
50%	0	-11500	-	A
51%	500	-11000	-	A
52%	1000	-10500	-	A
53%	1500	-10000	-	A
54%	2000	-9500	-	A
55%	2500	-9000	-	A
56%	3000	-8500	-	A
57%	3500	-8000	-	A
58%	4000	-7500	-	A
59%	4500	-7000	-	A
60%	5000	-6500	-	A
61%	5500	-6000	-	A
62%	6000	-5500	-	A
63%	6500	-5000	-	A
64%	7000	-4500	-	A
65%	7500	-4000	-	A
66%	8000	-3500	-	A
67%	8500	-3000	-	A
68%	9000	-2500	-	A
69%	9500	-2000	-	A
70%	10000	-1500	-	A
71%	10500	-1000	-	A
72%	11000	-500	-	A
73%	11500	0	-	A
74%	12000	500	-	A
75%	12500	1000	-	A
76%	13000	1500	-	A
77%	13500	2000	-	A
78%	14000	2500	-	A
79%	14500	3000	-	A
80%	15000	3500	-	A
81%	15500	4000	-	A
82%	16000	4500	-	A
83%	16500	5000	-	A
84%	17000	5500	-	A
85%	17500	6000	-	A
86%	18000	6500	-	A
87%	18500	7000	-	A
88%	19000	7500	-	A
89%	19500	8000	-	A
90%	20000	8500	-	A
91%	20500	9000	-	A
92%	21000	9500	-	A
93%	21500	10000	-	A
94%	22000	10500	-	A
95%	22500	11000	-	A
96%	23000	11500	-	A
97%	23500	12000	-	A
98%	24000	12500	-	A
99%	24500	13000	-	A
100%	25000	13500	-	A

Year	Cash flow A	Cash flow B
0	-10,000	-15,000
1	3,000	4,500
2	3,000	4,500
3	3,000	4,500
4	3,000	4,500
5	3,000	4,500


Interest Rates	NPV- A	NPV- B	Do Nothing	Decision
0%	5,000	6,500	-	B
1%	-24500	-36000	-	Do Nothing
2%	-24000	-35500	-	Do Nothing
3%	-23500	-35000	-	Do Nothing
4%	-23000	-34500	-	Do Nothing
5%	-22500	-34000	-	Do Nothing
6%	-22000	-33500	-	Do Nothing
7%	-21500	-33000	-	Do Nothing
8%	-21000	-32500	-	Do Nothing
9%	-20500	-32000	-	Do Nothing
10%	-20000	-31500	-	Do Nothing
11%	-19500	-31000	-	Do Nothing
12%	-19000	-30500	-	Do Nothing
13%	-18500	-30000	-	Do Nothing
14%	-18000	-29500	-	Do Nothing
15%	-17500	-29000	-	Do Nothing
16%	-17000	-28500	-	Do Nothing
17%	-16500	-28000	-	Do Nothing
18%	-16000	-27500	-	Do Nothing
19%	-15500	-27000	-	Do Nothing
20%	-15000	-26500	-	Do Nothing
21%	-14500	-26000	-	Do Nothing
22%	-14000	-25500	-	Do Nothing
23%	-13500	-25000	-	Do Nothing
24%	-13000	-24500	-	Do Nothing
25%	-12500	-24000	-	Do Nothing
26%	-12000	-23500	-	Do Nothing
27%	-11500	-23000	-	Do Nothing
28%	-11000	-22500	-	Do Nothing
29%	-10500	-22000	-	Do Nothing
30%	-10000	-21500	-	Do Nothing
31%	-9500	-21000	-	Do Nothing
32%	-9000	-20500	-	Do Nothing
33%	-8500	-20000	-	Do Nothing
34%	-8000	-19500	-	Do Nothing
35%	-7500	-19000	-	Do Nothing
36%	-7000	-18500	-	Do Nothing
37%	-6500	-18000	-	Do Nothing
38%	-6000	-17500	-	Do Nothing
39%	-5500	-17000	-	Do Nothing
40%	-5000	-16500	-	Do Nothing
41%	-4500	-16000	-	Do Nothing
42%	-4000	-15500	-	Do Nothing
43%	-3500	-15000	-	Do Nothing
44%	-3000	-14500	-	Do Nothing
45%	-2500	-14000	-	Do Nothing
46%	-2000	-13500	-	Do Nothing
47%	-1500	-13000	-	Do Nothing
48%	-1000	-12500	-	Do Nothing
49%	-500	-12000	-	Do Nothing
50%	0	-11500	-	A
51%	500	-11000	-	A
52%	1000	-10500	-	A
53%	1500	-10000	-	A
54%	2000	-9500	-	A
55%	2500	-9000	-	A
56%	3000	-8500	-	A
57%	3500	-8000	-	A
58%	4000	-7500	-	A
59%	4500	-7000	-	A
60%	5000	-6500	-	A
61%	5500	-6000	-	A
62%	6000	-5500	-	A
63%	6500	-5000	-	A
64%	7000	-4500	-	A
65%	7500	-4000	-	A
66%	8000	-3500	-	A
67%	8500	-3000	-	A
68%	9000	-2500	-	A
69%	9500	-2000	-	A
70%	10000	-1500	-	A
71%	10500	-1000	-	A
72%	11000	-500	-	A
73%	11500	0	-	A
74%	12000	500	-	A
75%	12500	1000	-	A
76%	13000	1500	-	A
77%	13500	2000	-	A
78%	14000	2500	-	A
79%	14500	3000	-	A
80%	15000	3500	-	A
81%	15500	4000	-	A
82%	16000	4500	-	A
83%	16500	5000	-	A
84%	17000	5500	-	A
85%	17500	6000	-	A
86%	18000	6500	-	A
87%	18500	7000	-	A
88%	19000	7500	-	A
89%	19500	8000	-	A
90%	20000	8500	-	A
91%	20500	9000	-	A
92%	21000	9500	-	A
93%	21500	10000	-	A
94%	22000	10500	-	A
95%	22500	11000	-	A
96%	23000	11500	-	A
97%	23500	12000	-	A
98%	24000	12500	-	A
99%	24500	13000	-	A
100%	25000	13500	-	A

Conclusion:

At 0% investor will invest in Alternative B

From 1% to 49%, No investment will be done as net present value is negative

After 50% to 100%, investor will invest in Alternative A.

Answer 7

Chapter 8, Problem 3P

To determine

Choice Table whether to invest in X or Y or do nothing.

Answer 8

Expert Solution & Answer

Answer to Problem 3P

At 0% investor will invest in Alternative B

From 1% to 49%, No investment will be done as net present value is negative

After 50% to 100%, investor will invest in Alternative A.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Given information:

Interest Rate is from 0% to 100%.

Year	A	B
0	($10,000)	($15,000)
1--5	3200	4500

Year	Cash flow A	Cash flow B
0	-10,000	-15,000
1	3,000	4,500
2	3,000	4,500
3	3,000	4,500
4	3,000	4,500
5	3,000	4,500


Interest Rates	NPV- A	NPV- B	Do Nothing	Decision
0%	5,000	6,500	-	B
1%	-24500	-36000	-	Do Nothing
2%	-24000	-35500	-	Do Nothing
3%	-23500	-35000	-	Do Nothing
4%	-23000	-34500	-	Do Nothing
5%	-22500	-34000	-	Do Nothing
6%	-22000	-33500	-	Do Nothing
7%	-21500	-33000	-	Do Nothing
8%	-21000	-32500	-	Do Nothing
9%	-20500	-32000	-	Do Nothing
10%	-20000	-31500	-	Do Nothing
11%	-19500	-31000	-	Do Nothing
12%	-19000	-30500	-	Do Nothing
13%	-18500	-30000	-	Do Nothing
14%	-18000	-29500	-	Do Nothing
15%	-17500	-29000	-	Do Nothing
16%	-17000	-28500	-	Do Nothing
17%	-16500	-28000	-	Do Nothing
18%	-16000	-27500	-	Do Nothing
19%	-15500	-27000	-	Do Nothing
20%	-15000	-26500	-	Do Nothing
21%	-14500	-26000	-	Do Nothing
22%	-14000	-25500	-	Do Nothing
23%	-13500	-25000	-	Do Nothing
24%	-13000	-24500	-	Do Nothing
25%	-12500	-24000	-	Do Nothing
26%	-12000	-23500	-	Do Nothing
27%	-11500	-23000	-	Do Nothing
28%	-11000	-22500	-	Do Nothing
29%	-10500	-22000	-	Do Nothing
30%	-10000	-21500	-	Do Nothing
31%	-9500	-21000	-	Do Nothing
32%	-9000	-20500	-	Do Nothing
33%	-8500	-20000	-	Do Nothing
34%	-8000	-19500	-	Do Nothing
35%	-7500	-19000	-	Do Nothing
36%	-7000	-18500	-	Do Nothing
37%	-6500	-18000	-	Do Nothing
38%	-6000	-17500	-	Do Nothing
39%	-5500	-17000	-	Do Nothing
40%	-5000	-16500	-	Do Nothing
41%	-4500	-16000	-	Do Nothing
42%	-4000	-15500	-	Do Nothing
43%	-3500	-15000	-	Do Nothing
44%	-3000	-14500	-	Do Nothing
45%	-2500	-14000	-	Do Nothing
46%	-2000	-13500	-	Do Nothing
47%	-1500	-13000	-	Do Nothing
48%	-1000	-12500	-	Do Nothing
49%	-500	-12000	-	Do Nothing
50%	0	-11500	-	A
51%	500	-11000	-	A
52%	1000	-10500	-	A
53%	1500	-10000	-	A
54%	2000	-9500	-	A
55%	2500	-9000	-	A
56%	3000	-8500	-	A
57%	3500	-8000	-	A
58%	4000	-7500	-	A
59%	4500	-7000	-	A
60%	5000	-6500	-	A
61%	5500	-6000	-	A
62%	6000	-5500	-	A
63%	6500	-5000	-	A
64%	7000	-4500	-	A
65%	7500	-4000	-	A
66%	8000	-3500	-	A
67%	8500	-3000	-	A
68%	9000	-2500	-	A
69%	9500	-2000	-	A
70%	10000	-1500	-	A
71%	10500	-1000	-	A
72%	11000	-500	-	A
73%	11500	0	-	A
74%	12000	500	-	A
75%	12500	1000	-	A
76%	13000	1500	-	A
77%	13500	2000	-	A
78%	14000	2500	-	A
79%	14500	3000	-	A
80%	15000	3500	-	A
81%	15500	4000	-	A
82%	16000	4500	-	A
83%	16500	5000	-	A
84%	17000	5500	-	A
85%	17500	6000	-	A
86%	18000	6500	-	A
87%	18500	7000	-	A
88%	19000	7500	-	A
89%	19500	8000	-	A
90%	20000	8500	-	A
91%	20500	9000	-	A
92%	21000	9500	-	A
93%	21500	10000	-	A
94%	22000	10500	-	A
95%	22500	11000	-	A
96%	23000	11500	-	A
97%	23500	12000	-	A
98%	24000	12500	-	A
99%	24500	13000	-	A
100%	25000	13500	-	A
Year	Cash flow A	Cash flow B
0	-10,000	-15,000
1	3,000	4,500
2	3,000	4,500
3	3,000	4,500
4	3,000	4,500
5	3,000	4,500


Interest Rates	NPV- A	NPV- B	Do Nothing	Decision
0%	5,000	6,500	-	B
1%	-24500	-36000	-	Do Nothing
2%	-24000	-35500	-	Do Nothing
3%	-23500	-35000	-	Do Nothing
4%	-23000	-34500	-	Do Nothing
5%	-22500	-34000	-	Do Nothing
6%	-22000	-33500	-	Do Nothing
7%	-21500	-33000	-	Do Nothing
8%	-21000	-32500	-	Do Nothing
9%	-20500	-32000	-	Do Nothing
10%	-20000	-31500	-	Do Nothing
11%	-19500	-31000	-	Do Nothing
12%	-19000	-30500	-	Do Nothing
13%	-18500	-30000	-	Do Nothing
14%	-18000	-29500	-	Do Nothing
15%	-17500	-29000	-	Do Nothing
16%	-17000	-28500	-	Do Nothing
17%	-16500	-28000	-	Do Nothing
18%	-16000	-27500	-	Do Nothing
19%	-15500	-27000	-	Do Nothing
20%	-15000	-26500	-	Do Nothing
21%	-14500	-26000	-	Do Nothing
22%	-14000	-25500	-	Do Nothing
23%	-13500	-25000	-	Do Nothing
24%	-13000	-24500	-	Do Nothing
25%	-12500	-24000	-	Do Nothing
26%	-12000	-23500	-	Do Nothing
27%	-11500	-23000	-	Do Nothing
28%	-11000	-22500	-	Do Nothing
29%	-10500	-22000	-	Do Nothing
30%	-10000	-21500	-	Do Nothing
31%	-9500	-21000	-	Do Nothing
32%	-9000	-20500	-	Do Nothing
33%	-8500	-20000	-	Do Nothing
34%	-8000	-19500	-	Do Nothing
35%	-7500	-19000	-	Do Nothing
36%	-7000	-18500	-	Do Nothing
37%	-6500	-18000	-	Do Nothing
38%	-6000	-17500	-	Do Nothing
39%	-5500	-17000	-	Do Nothing
40%	-5000	-16500	-	Do Nothing
41%	-4500	-16000	-	Do Nothing
42%	-4000	-15500	-	Do Nothing
43%	-3500	-15000	-	Do Nothing
44%	-3000	-14500	-	Do Nothing
45%	-2500	-14000	-	Do Nothing
46%	-2000	-13500	-	Do Nothing
47%	-1500	-13000	-	Do Nothing
48%	-1000	-12500	-	Do Nothing
49%	-500	-12000	-	Do Nothing
50%	0	-11500	-	A
51%	500	-11000	-	A
52%	1000	-10500	-	A
53%	1500	-10000	-	A
54%	2000	-9500	-	A
55%	2500	-9000	-	A
56%	3000	-8500	-	A
57%	3500	-8000	-	A
58%	4000	-7500	-	A
59%	4500	-7000	-	A
60%	5000	-6500	-	A
61%	5500	-6000	-	A
62%	6000	-5500	-	A
63%	6500	-5000	-	A
64%	7000	-4500	-	A
65%	7500	-4000	-	A
66%	8000	-3500	-	A
67%	8500	-3000	-	A
68%	9000	-2500	-	A
69%	9500	-2000	-	A
70%	10000	-1500	-	A
71%	10500	-1000	-	A
72%	11000	-500	-	A
73%	11500	0	-	A
74%	12000	500	-	A
75%	12500	1000	-	A
76%	13000	1500	-	A
77%	13500	2000	-	A
78%	14000	2500	-	A
79%	14500	3000	-	A
80%	15000	3500	-	A
81%	15500	4000	-	A
82%	16000	4500	-	A
83%	16500	5000	-	A
84%	17000	5500	-	A
85%	17500	6000	-	A
86%	18000	6500	-	A
87%	18500	7000	-	A
88%	19000	7500	-	A
89%	19500	8000	-	A
90%	20000	8500	-	A
91%	20500	9000	-	A
92%	21000	9500	-	A
93%	21500	10000	-	A
94%	22000	10500	-	A
95%	22500	11000	-	A
96%	23000	11500	-	A
97%	23500	12000	-	A
98%	24000	12500	-	A
99%	24500	13000	-	A
100%	25000	13500	-	A

Year	Cash flow A	Cash flow B
0	-10,000	-15,000
1	3,000	4,500
2	3,000	4,500
3	3,000	4,500
4	3,000	4,500
5	3,000	4,500


Interest Rates	NPV- A	NPV- B	Do Nothing	Decision
0%	5,000	6,500	-	B
1%	-24500	-36000	-	Do Nothing
2%	-24000	-35500	-	Do Nothing
3%	-23500	-35000	-	Do Nothing
4%	-23000	-34500	-	Do Nothing
5%	-22500	-34000	-	Do Nothing
6%	-22000	-33500	-	Do Nothing
7%	-21500	-33000	-	Do Nothing
8%	-21000	-32500	-	Do Nothing
9%	-20500	-32000	-	Do Nothing
10%	-20000	-31500	-	Do Nothing
11%	-19500	-31000	-	Do Nothing
12%	-19000	-30500	-	Do Nothing
13%	-18500	-30000	-	Do Nothing
14%	-18000	-29500	-	Do Nothing
15%	-17500	-29000	-	Do Nothing
16%	-17000	-28500	-	Do Nothing
17%	-16500	-28000	-	Do Nothing
18%	-16000	-27500	-	Do Nothing
19%	-15500	-27000	-	Do Nothing
20%	-15000	-26500	-	Do Nothing
21%	-14500	-26000	-	Do Nothing
22%	-14000	-25500	-	Do Nothing
23%	-13500	-25000	-	Do Nothing
24%	-13000	-24500	-	Do Nothing
25%	-12500	-24000	-	Do Nothing
26%	-12000	-23500	-	Do Nothing
27%	-11500	-23000	-	Do Nothing
28%	-11000	-22500	-	Do Nothing
29%	-10500	-22000	-	Do Nothing
30%	-10000	-21500	-	Do Nothing
31%	-9500	-21000	-	Do Nothing
32%	-9000	-20500	-	Do Nothing
33%	-8500	-20000	-	Do Nothing
34%	-8000	-19500	-	Do Nothing
35%	-7500	-19000	-	Do Nothing
36%	-7000	-18500	-	Do Nothing
37%	-6500	-18000	-	Do Nothing
38%	-6000	-17500	-	Do Nothing
39%	-5500	-17000	-	Do Nothing
40%	-5000	-16500	-	Do Nothing
41%	-4500	-16000	-	Do Nothing
42%	-4000	-15500	-	Do Nothing
43%	-3500	-15000	-	Do Nothing
44%	-3000	-14500	-	Do Nothing
45%	-2500	-14000	-	Do Nothing
46%	-2000	-13500	-	Do Nothing
47%	-1500	-13000	-	Do Nothing
48%	-1000	-12500	-	Do Nothing
49%	-500	-12000	-	Do Nothing
50%	0	-11500	-	A
51%	500	-11000	-	A
52%	1000	-10500	-	A
53%	1500	-10000	-	A
54%	2000	-9500	-	A
55%	2500	-9000	-	A
56%	3000	-8500	-	A
57%	3500	-8000	-	A
58%	4000	-7500	-	A
59%	4500	-7000	-	A
60%	5000	-6500	-	A
61%	5500	-6000	-	A
62%	6000	-5500	-	A
63%	6500	-5000	-	A
64%	7000	-4500	-	A
65%	7500	-4000	-	A
66%	8000	-3500	-	A
67%	8500	-3000	-	A
68%	9000	-2500	-	A
69%	9500	-2000	-	A
70%	10000	-1500	-	A
71%	10500	-1000	-	A
72%	11000	-500	-	A
73%	11500	0	-	A
74%	12000	500	-	A
75%	12500	1000	-	A
76%	13000	1500	-	A
77%	13500	2000	-	A
78%	14000	2500	-	A
79%	14500	3000	-	A
80%	15000	3500	-	A
81%	15500	4000	-	A
82%	16000	4500	-	A
83%	16500	5000	-	A
84%	17000	5500	-	A
85%	17500	6000	-	A
86%	18000	6500	-	A
87%	18500	7000	-	A
88%	19000	7500	-	A
89%	19500	8000	-	A
90%	20000	8500	-	A
91%	20500	9000	-	A
92%	21000	9500	-	A
93%	21500	10000	-	A
94%	22000	10500	-	A
95%	22500	11000	-	A
96%	23000	11500	-	A
97%	23500	12000	-	A
98%	24000	12500	-	A
99%	24500	13000	-	A
100%	25000	13500	-	A