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Determine the range of investment costs for Alternative B that will convince an investor to select Alternative E

Determine the range of investment costs for Alternative B that will convince an investor to select Alternative E

Entrepreneurial Finance
Entrepreneurial Finance
6th Edition
ISBN:9781337635653
Author:Leach
Publisher:Leach
Chapter11: Venture Capital Valuation Methods
Section: Chapter Questions
Problem 14DQ
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Consider the following two investment alternatives. Determine the range of investment costs for Alternative B (i.e., min. value < X <max. value) that will convince an investor to select Alternative B. MARR = 10% per year, and other relevant data are shown in the following table. Assume repeatability. Alt A. $4,700 $ 1,700 $2,000 5 years Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% p Capital investment Net annual receipts Market value Useful life Determine the range of investment costs for Alternative B that will convince an investor to select Alternative E S < Investment costs for Alternative B < $ Alt B. $ X $1,500 $ 4,300 8 years More Info N 1 2 3 4 5 6 7 8 9 GIVITT FIP 1.1000 1.2100 1.3310 1.4641 1.6105 1.7716 1.9487 2.1436 2 3579 GIVIT PIF 0.9091 0.8264 0.7513 0.6830 0.6209 0.5645 0.5132 0.4665 04241 Print GIVITA FIA 1.0000 2.1000 3.3100 4.6410 6.1051 7.7156 9.4872 11.4359 13 5795 Done GIVGTA PIA 0.9091 1.7355 2.4869 3.1699 3.7908 4.3553 4.8684 5.3349 5 7590 Ivanा AIF 1.0000 0.4762 0.3021 0.2155 0.1638 0.1296 0.1054 0.0874 0.0736 ▶ - X
Transcribed Image Text:Consider the following two investment alternatives. Determine the range of investment costs for Alternative B (i.e., min. value < X <max. value) that will convince an investor to select Alternative B. MARR = 10% per year, and other relevant data are shown in the following table. Assume repeatability. Alt A. $4,700 $ 1,700 $2,000 5 years Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% p Capital investment Net annual receipts Market value Useful life Determine the range of investment costs for Alternative B that will convince an investor to select Alternative E S < Investment costs for Alternative B < $ Alt B. $ X $1,500 $ 4,300 8 years More Info N 1 2 3 4 5 6 7 8 9 GIVITT FIP 1.1000 1.2100 1.3310 1.4641 1.6105 1.7716 1.9487 2.1436 2 3579 GIVIT PIF 0.9091 0.8264 0.7513 0.6830 0.6209 0.5645 0.5132 0.4665 04241 Print GIVITA FIA 1.0000 2.1000 3.3100 4.6410 6.1051 7.7156 9.4872 11.4359 13 5795 Done GIVGTA PIA 0.9091 1.7355 2.4869 3.1699 3.7908 4.3553 4.8684 5.3349 5 7590 Ivanा AIF 1.0000 0.4762 0.3021 0.2155 0.1638 0.1296 0.1054 0.0874 0.0736 ▶ - X
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