Question: 1. The cash flows (in KD) for two mutually exclusive alternatives in Kuwait are as in the table below: [4] n Y X X -
1. The cash flows (in KD) for two mutually exclusive alternatives in Kuwait are as in the table below: [4]
n
Y
X
X - Y
0
-3,000
-12,000
-9,000
1
1,350
4,200
2,850
2
1,800
6,225
4,425
3
1,500
6,330
4,830
RoR (%)
23
18
15
a. Which project would you select at MARR = 20%? Why? [2]
b. Which of the two alternatives is not financially viable? Why? [2]
2. The equivalent annual worth of an increasing arithmetic gradient is $55,400. If the cash flow in year 1 is $17,000 and the gradient amount is $11,000, what is the value of n at an interest rate of 8% per year? [4]
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