Consider the following three mutually exclusive alternatives. Each alternative has a 10- year useful life and no salvage value. Using present worth analysis, draw a graph in the MS Excel template on sheet Q8 showing these three alternatives for various interest rates (save this graph as a separate sheet in MS Excel and name this sheet Graph Q8). Also construct a choice table for interest rates from 0% to 100%. Show your choice table in your working document.

Consider the following three mutually exclusive alternatives. Each alternative has a 10- year useful life and no salvage value. Using present worth analysis, draw a graph in the MS Excel template on sheet Q8 showing these three alternatives for various interest rates (save this graph as a separate sheet in MS Excel and name this sheet Graph Q8). Also construct a choice table for interest rates from 0% to 100%. Show your choice table in your working document.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Three alternatives have the following cost and annual benefit data associated with them: The loan payments are calculated using an interest rate of 10%, a life equal to the life of the machine, and a down payment of 30%. Use a MARR of 12% and determine which machine, if any, should be purchased. Use incremental rate of return for your analysis. Do not forget to use DN in the analysis.
Consider the following four alternatives. Three are do-something and one is Do -Nothing. Alternative A B D Cost $O $50 $30 $40 Net annual benefit Useful life (years) Which is the preferred alternative? If 10% interest rate is selected. Use PW analysis. $O $14 $5 $7 5 10 10
2) Data for 2 alternatives are given below, determine the cost of alternative B so that the two alternatives will be equally desirable. Assume an interest rate of 15%. Use benefit cost ratio analysis Alternatives A B Cost P100KX Salvage Value 10k 16k Annual Benefit 28k 30k Life (years) 10 12
Data for 2 alternatives are given below, determine the cost of alternative B so that the two alternatives will be equally desirable. Assume an interest rate of 15%. Use benefit cost ratio analysis Alternatives A Cost Salvage Value Annual Benefit Life (years) B P100k X 10k 16k 28k 30k 10 12
Consider two mutually exclusive alternative. Construction a choice table using PW for interest rate from 0% to 20%. If the minimum attractive rate of return is 8%, which alternative should be selected? Alternative A B Fist cost $2,000 $3,000 Uniform annual benefit $450 $600 Salvage Value $200 700 Useful life 6 years 6 years Hint: Equation: PW_A = 450(P/A, i, 6) + 200(P/F, i, 6) – 2000 PW_B = 600(P/A, i, 6) + 700(P/F, i, 6) – 3000 or Spreadsheet: PW_A = -PV(i, nper, pmt, fv) – 2000 = -PV(i, 6, 450, 200) - 2000 PW_B = -PV(i, nper, pmt, fv) – 3000 = -PV(i, 6, 600, 700) - 3000
Use the graph below to answer the following two statements. (2) Project _________ has the higher IRR. At a discount rate of rate 10%, project _________ should be chosen.
Find the future value of a five-year $124,000 investment that pays 8.75 percent and that has the following compounding periods: (Do not round intermediate calculations, round final answers to 2 decimal places, e.g. 15.25.) Excel Template(Note: This template includes the problem statement as it appears in your textbook. The problem assigned to you here may have different values. When using this template, copy the problem statement from this screen for easy reference to the values you’ve been given here, and be sure to update any values that may have been pre-entered in the template based on the textbook version of the problem.) Value of investment after 5 years a. Quarterly $ b. Monthly $ c. Daily $ d. Continuous $
Find the future value of a five-year $96,000 investment that pays 5.50 percent and that has the following compounding periods: (Do- not round intermediate calculations, round final answers to 2 decimal places, e.g. 15.25.) Excel Template (Note: This template includes the problem statement as it appears in your textbook. The problem assigned to you here may have different values. When using this template, copy the problem statement from this screen for easy reference to the values you've been given here, and be sure to update any values that may have been pre-entered in the template based on the textbook version of the problem.) Value of investment after 5 years a. Quarterly b. Monthly c. Daily $ d. Continuous $ 129821 125232 129730
Consider the following two investment alternatives. Determine the range of investment costs for Alternative B (i.e., min. value < X
VMIC Corp. has asked you to look at the following data. The interest rate is 10%. (a) What is the new asset’s minimum cost life? (b) When, if at all, should we replace the existing asset with the new asset?
Following projects, A and B are mutually exclusive. Use a discount rate of 7.6 percent to solve the following. Year 1 2. 3 4 5. Project A -11000 4000 3000 4000 4000 2000 Project B -15000 5000 4000 5000 7000 3000 Calculate the NPV and IRR, and select the project.
2) First, calculate the payback period and NPV for all projects below. For all the projects, the relevant discount rate is 10%. Then, comment on why the payback period provides misleading information about the following: a. Project A b. Project B versus Project C c. Project D versus Project E d. Project D versus Project F Year A B C D E F 0 -1.000 -1.000 -1.000 -1.000 -1.000 -1.000 1 1,000 100 400 500 400 500 2 200 300 500 400 500 3 300 200 500 400 10.000 4 400 100 400 5 500 500 400

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