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- The table below shows a comparison between three mutually exclusive alternatives. If the capital investment of A < B < C, and the MARR is 15%, arrange these alternatives based on decreasing Annual worth (From the Highest annual worth to the Lowest annual worth)? Comparison A C B-A C-A | C-B RR% 195 16.7 17.4 16.2 15.4 17.6 О а. ВСА O b. CAB О с. СВА O d. BAC company's required rate of return is 10% and, in using the present worth method, a project's net present value is zero, this indicates that the O a. project earns a rate of return of 10%. O b. project's rate of return exceeds 10%. C. project earns a rate of return of 0%. d. project's rate of return is less than the minimum rate required.Two alternatives are being considered: B First cost Uniform annual benefit Useful life, in 5000 9600 1750 1850 4 8 years If the minimum attractive rate of return is 7%, which alternative should be selected? Solution: 1. Use the increment analysis, we should use 2. Terms n= 3. The Increment CFD has 3 basic patterns: O AP= O AA= O AF= occurred at end of year 4. AROR= % 5. Choose Please answer all parts of the question.j. Find the PV and the FV of an investment that makes the following end-of-year payments. The interest rate is 8%. Year 1 $100, Year 2 $200, Year 3 $400 Year Payment 1 100 2 200 3 400 Rate 8% To find the PV, use the NPV function: Pv= $581.59 Year Payment x (1+ I)^(N- t) = FV 1 100 2 200 3 400
- Five alternatives are being evaluated by the incremental rate of return method. Incremental Rate of Return, % Initial Alternative Investment, $ versus DN, % A Overall ROR B CDE A 9.6 27.3 9.4 35.3 25.0 -25,000 -35,000 -40,000 -60,000 38.5 24.4 46.5 27.3 B. 15.1 - C 13.4 - D 25.4 6.8 - 75,000 20.2 (SO2PI1) If the projects above are mutually exclusive and the MARR is 20% per year, the best alternative is Select one: O a B ObC OcD OdETwo alternatives are being considered: First cost Uniform annual benefit Useful life, in years If the minimum attractive rate of return is 7%, which alternative should be selected? Solution: 2. Terms n= 8 1. Use the increment analysis, we should use B-A ο ΔΑΞ A 3. The Increment CFD has 3 basic patterns: ο ΔΡ= ο ΔΕΞ 4. AROR= 8.32 % 5. Choose B 5400 9800 1750 1850 4 8 B occurred at end of year 4Suppose that we can describe the world using two states and that two assets are available, asset K an asset L. We assume the asset’s future prices have the following distribution State Future Price Asset K Future Price Asset L 1 $55 $60 2 $45 $30 The current price of asset K is $50, and the current price of asset L is $50. 1. What are the values of the unit claims (C1 and C2 )?
- If a project has a profitability index of 1.20, then the project's internal rate of return is O equal to the discount rate. O less than the discount rate. O greater than the discount rate. O equal to 20%. Save for Later O 10 C Attempts: 0 of 1 used F10 Submit AnsFive alternatives are being evaluated by the incremental rate of return method. Incremental Rate of Return, % Initial Overall ROR Alternative Investment, $ versus DN, % A B D - 25,000 - 35,000 - 40,000 -60,000 -75,000 9.6 27.3 9.4 35.3 25.0 В 15.1 38.5 24.4 13.4 46.5 27.3 - 25.4 6.8 20.2 (SO2PI1) If the projects above are mutually exclusive and the MARR is 5% per year, the best alternative is Select one: O a. E O b. A O c.D d. B ABCDEWhich alternative should be selected using incremental rate of return analysis, if MARR = 12.0%? First cost Annual benefit Life ROR Do-nothing 0 10 yrs A B $6,500 $3,500 1,246 765 с D $7,500 $5,000 1,523 779 14.0% 17.5% 15.5% 9.0% B, because its ROR is the highest something other than C, because C costs the most initially C because C has the highest annual benefit C, because the C-B increment has a ROR of 13.70% and the A-B increment has a ROR of 9.66%
- 9.36 The fouT mutuzlly exclusive alternatives below are being compared using the B/C method. What altemative, if any, should be selected? Initial Investment, Incremental B/C When Compared With Altemative Altemative S Millions BC Ratio K L 20 0.40 --- 25 33 0.96 122 K 1.42 2.14 --- 0.72 0.80 0.08-- 45 0.39 I. Activate Winde PC settings to DFocus SAN FRACISCO.CABased on the values in the Table below, identify the present value of benefits for Year 5 if the rate of return is 0.14. Year 1 2 3 4 5 6 7 Benefits 25000 31200 38500 51000 60100 66000 72000 Multiplier 0.87 0.77 0.68 0.59 Present Value of 21750 24024 26180 30090 Benefits A. 52287 В. 31252 C. 24040 D. 30360 B.Q9. Find the NPV, payback period and profit index for both projects, if the discountrate is 11%: Year Project A Project B -200 -200 1 80 100 2 80 100 80 100 80 Which mutually exclu sive project would you select and why?