CHE249H1 Lecture Notes - Lecture 10: De Facto
1 Mar 2016
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Pv = a (p / a ,i ,n)= a [ 1 (1+r) n r. We want to do the projects with the highest irr first, but out budget is. With that in mind, we can only do the top 3 projects (under budget by. ,800) because the budget for the top 4 would be ,200. However, can select f over d, implying pwf > pwd, or select c over f, implying pwc > pwf. Yet 2nd sentence says pwc > pwf > pwd, which is not possible, because pwd > pwc. Pick c over f: we use the formula b v sl(n)=p n[ p s. P)1: we use the formula b v fr(n)=p (1 d)n of the last year, (year 4), the value drops by an arbitrary amount to the salvage value. , where d=25 as given in the question, but by the end: we use the formula d= 2.
