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27 Mar 2018

Consider the following two cash flows representing two mutually exclusive projects. Which project should you accept at 10% interest assuming there is no do-nothing alternative

GIVEN INFORMATION

PROJECT A:

YEAR

0

AMOUNT

$-100,000

1 $-50,000

2 $30,000

3 $30,000

4
$30,000

5 $30,000

6 $30,000

7 $30,000

8 $75,000

PROJECT B:

YEAR

0

AMOUNT

$-100,000

1 0

2 $50,000

3 0

4 $50,000

5 0

6 $50,000

7 0

8 $50,000

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Elin HesselLv2

30 Mar 2018

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6) The AW values of three alternatives are $-50,000 for A, $-35,000 for B, and $-48,000 for C. On the basis of these AW values, the correct decision is to:

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c. Select alternative C

d. Select the do-nothing alternative

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c. CR=$17,084 for project A and CR=$15,129 for project B

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9-11. The four cost alternatives described below are being evaluated.

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b. Alternative B, C, and D

c. Only Alternative B

d. Only Alternative B and C

10) If the proposals are mutually exclusive, which should be selected with MARR=15%?

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b. Only alternative B

c. Alternative B and C

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a. Select alternative D

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d. Select all alternatives A, B, C, and D

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b. 0 = 4,000 + 100(P/A,6%,12) + x(P/F,6%,12)

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1a) A project has the following costs and benefits. What is the payback period

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1b) Mention two disadvantages of using the payback period analysis

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