Actuarial Science 2053 Chapter Notes - Chapter 7: Net Present Value, X 2000, Microsoft Excel

• School: Western University
• Department: Actuarial Science
• Course: Actuarial Science 2053
• Professor: Bob Larose

Document Summary

Part a: npv at 10% = 100 000 + 40 000(1. 10) 1 + 30 000(1. 10) 2 + 40 000(1. 10) 3. The investment should proceed: npv at 7% = 100 000 + 50 000(1. 07) 1 + 60 000(1. 07) 2 + 20 000(1. 07) 3. The investment should proceed: npv at 12% = 100 000 + 15 000(1. 12) 1 + 20 000(1. 12) 2 + 40 000(1. 12) 3. The investment should not proceed: npv at 9% = 100 000 + 80 000(1. 09) 1 + 60 000(1. 09) 1 + 20 000(1. 09) 3. The investment should proceed: at j1 = 4% : npv(a) = 200 000 + 50 000a5|. 04 = 591. 12. Choose project b: at j1 = 7% : npv (a) = 200 000 + 50 000a5|. 07 = . 87. Npv (b) = 200 000 + 100 000(1. 07) 2a3|. 07 = 217. 93. Choose project b: npv(a) = 50 000 + 20 000(1. 10) 1 + 10 000(1. 10) 2 + 5000(1. 10) 3.