Use an 8-year analysis period and a 10% interest rate to determine which of the alternatives below should be selected. What is the NPV of both alternatives and which should be selected.
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- Assuming that Alternatives B and C are replaced with identical units at the end of their useful lives, and an 8% interest rate, which alternative should be selected? Use an annual cash flow analysis. A B C cost $12,500 $15,000 $17,500 Annual benefit 1,500 3,500 2,500 useful life (yrs) 7 15Given the financial data in the table below for two mutually exclusive alternatives, determine the value "X" for the two alternatives to be equally attractive. Use an interest rate of 12% per year. Q Initial cost $2,500 $4,000 Annual benefit 400 LifeUsing a 10% interest rate, determine which alternative, if any, should be selected, based on net present worth. Alternative A B First Cost $5,300 $10,700 Uniform Annual Benefit 1,800 2,100 Useful life 4 years 8 years
- At what interest rate the 5-year Benefit-Cost-Ratio (BCR) becomes unity for an equipment project with the immediate installation cost of -$2500 (in year 0) and a maintenance cost of -$1500 in year 3, and annual benefit of $1000 from the first year onward (n=1 to 5)? Select one: O A. 12.5% O B. 11.5% OC. 14.5% O D. 13.5% O E. 5%Calculate the annual benefits (A) If G = 200$, n = 5 years and i = 11%. Select one: a. 395$ O b. 385$ O c. 358$If the minimum attractive rate of return is 7%, calculate the incremental rate of return. A ($) B ($) First Cost 5000 9200 Uniform Annual Benefit 1750 Useful Life (Years) 4 1850 8
- Whats the paybck period & discounted payback period for a project with costof 2OO,OOO that generates an annualcash infloww of 3O,OOO for the first 2years, 4O,OOO per year for years 3to5, & 5O,OOO per year for years 6through9?1. Determine the B/C ratio for the following project. First Cost P100, 000 Project life, years 5 Salvage value P10, 000 Annual benefits P60, 000 Annual O and M P22, 000 Interest rate, % 15 Ans: B/C = 1.16If the Interest rate is 10%, what is the present value? (Use excel function) A Initial Cost 5300 Uniform Annual Benefit 1800 Useful Life 4yrs Salvage Value 0
- Find the amount that should be set aside today to yield the desired future amount. Use the table. Future amount Interest Compounding Investment time rate period 4% semiannually 4 years Click here to view page 1 of the table. Click here to view page 2 of the table. needed $2,000 The amount that should be set aside today is $ GLEED (Round to the nearest cent as needed.)Refer to the data provided below for Proposal A Proposal AInitial investment $100,000Cash flow from operations Year 1 60,000Year 2 40,000Year 3 35,000Disinvestment -Life (years) 3Discount rate (for all proposals) 12% Compute the net present value for Proposal A ( for all 3 years) and consider this the likely scenario. Note: Round your answers to the nearest whole dollar. Use a negative sign to indicate a cash outflow.A company is considering two projects. The discount rate is 10 percent, and the projects’ cash flows would be: Years 0 1 2 3 Project A -$700 $500 $300 $100 Project B -$700 $100 $300 $600 Calculate the projects’ NPVs and IRRs. Project (A): NPV= =777.61-700=77.61 IRR= =18.005% Project (B): NPV= =789.63-700=89.63 IRR= =15.559% If the two projects are independent, which project(s) should be chosen? If the two projects are mutually exclusive, which project should be chosen?
