solution

can you please explain how to solve

can you just solve this qustion with explaining please

Chapter 4, Problem 007 Please Note: this solution shows the solution to the problem with one particular set of values. These values may not match those in the problem you have been given to solve. Problem Statement Alternatives 1, 2, and 3 have lives of 3, 4, and 6 years, respectively. Their net cash flow (NCF) and salvage value (SV) profiles are as follows: Alternative 1 Alternative 1 Alternative 2 Alternative 2 Alternative 3 Alternative 3 End of Year NCF1 S V1 NCF2 SV2 NCF3 SV3 -$20,000 -$40,000 $40,000 $70,000 $70,000 $8,000 $20,000 $30,000 $30,000 $50,000 $8,000 $20,000 $20,000 $30,000 $30,000 $28,000 $20,000 $10,000 $30,000 $20,000 $20,000 $0 $30,000 $10,000 $30,000 $5,000 $30,000 $2,000 au W NH Additional explanation is necessary: the NCF profile of Alternative 1 that is shown above is the net result of a $20,000/year lease payment payable at the beginning of each year, plus an end-of-year net revenue of $28,000. This lease arrangement may be renewed in 3-year increments; however, premature cancellation of the lease results in a lease termination penalty (cost) of $10,000 at the time of cancellation. The NCFs of all other alternatives are expected to repeat indefinitely as shown. a. If a least-common-multiple-of-lives approach is to be used, specify the planning horizon and the complete set of cash flows for each alternative. b. Repeat (a) using the shortest life approach. c. Repeat (a) using the longest life approach. d. Repeat (a) using a standard planning horizon of 2 years. e. Repeat (a) using a standard planning horizon of 5 years. Solution PROBLEM 4.7 LCM PLANNING HORIZON = 12 YEARS EOY ALT 1 -$20 000.00 28,000 - 20.000 = $8,000 28,000 - 20.000 = 58,000 28,000 - 20.000 = $8,000 28,000 - 20,000 = $8,000 28,000 - 20,000 = $8.000 28,000 - 20,000 = $8,000 28,000 - 20,000 = $8,000 28,000 - 20.000 = $8,000 28,000 - 20,000 = $8,000 10 28,000 - 20,000 = $8,000 28,000 - 20,000 = $8,000 $28 000 DOWN ALT2 -$40 000.00 $20 000.00 $20 000.00 $20 000.00 20,000 - 40,000 = -$20,000 $20 000.00 $20 000.00 $20 000.00 20,000 - 40,000 = -$20,000 $20 000.00 $20 000.00 $20 000.00 $20 000.00 ALT 3 -$70 000.00 $30 000.00 $30 000.00 $30 000.00 $30 000.00 $30 000.00 30,000 2,000 - 70,000 = -$38,000 $30 000.00 $30 000.00 $30 000.00 $30 000.00 $30 000.00 30.000 + 2,000 = $32,000 12 SHORTEST LIFE PLANNING HORIZON = 3 YEARS EOY ALT 1 ALT 2 -$20 000.00 -S40 000.00 28,000 - 20,000 = $8,000 $20 000.00 28,000 - 20,000 = $8,000 $20 000.00 $28 000 20,000 + 10,000 = $30,000 ALT 3 -$70 000.00 $30 000.00 $30 000.00 30,000 + 20,000 = $50,00 LONGEST LIFE PLANNING HORIZON = 6 YEARS WN ALT 1 -$20 000.00 28,000 - 20,000 = $8,000 28,000 - 20,000 = $8,000 28,000 - 20.000 = $8,000 28,000 - 20,000 = $8,000 28,000 - 20,000 = $8,000 $28 000 ALT2 -$40 000.00 $20 000.00 $20 000.00 $20 000.00 20,000 - 40,000 = $20,000 $20 000.00 20,000 + 20,000 = $40,000 ALT 3 -$70 000.00 $30 000.00 $30 000.00 $30 000.00 $30 000.00 $30 000.00 30,000 2,000 = $32,000 STANDARD PLANNING HORIZON = 2 YEARS EOY ALT 1 -$20 000.00 28,000 - 20,000 = $8,000 28,000 - 10,000 = $18,000 ALT 2 -$40 000.00 $20 000.00 20,000 - 20,000 = $40,000 ALT3 $70 000.00 $30 000.00 30,000 - 30,000 = $60,000 STANDARD PLANNING HORIZON = 5 YEARS EOY ALT 1 ALT 2 -$20 000.00 -$40 000.00 28,000 - 20,000 = $8,000 $20 000.00 28,000 - 20,000 = $8,000 $20 000.00 28,000 - 20,000 = $8,000 $20 000.00 20.000 - 40,000 = $20,000 28,000 - 10,000 = $18,000 20,000 + 30,000 = $50,000 ALT 3 $70 000.00 $30 000.00 $30 000.00 $30 000.00 $30 000.00 30,000 5,000 = $35,000 on AWN Chapter 4, Problem 007 Please Note: this solution shows the solution to the problem with one particular set of values. These values may not match those in the problem you have been given to solve. Problem Statement Alternatives 1, 2, and 3 have lives of 3, 4, and 6 years, respectively. Their net cash flow (NCF) and salvage value (SV) profiles are as follows: Alternative 1 Alternative 1 Alternative 2 Alternative 2 Alternative 3 Alternative 3 End of Year NCF1 SV1 NCF2 SV2 NCF3 SV3 -$20,000 -$40,000 $40,000 $70,000 $70,000 $8,000 $20,000 $30,000 $30,000 $50,000 $8,000 $20,000 $30,000 $30,000 WN $20,000 $10,000 $28,000 $20,000 $30,000 $20,000 $10,000 $20,000 $0 $30,000 $30,000 $30,000 + $5,000 $2,000 Additional explanation is necessary: the NCF profile of Alternative 1 that is shown above is the net result of a $20,000/year lease payment payable at the beginning of each year, plus an end-of-year net revenue of $28,000. This lease arrangement may be renewed in 3-year increments; however, premature cancellation of the lease results in a lease termination penalty (cost) of $10,000 at the time of cancellation. The NCFs of all other alternatives are expected to repeat indefinitely as shown. a. If a least-common-multiple-of-lives approach is to be used, specify the planning horizon and the complete set of cash flows for each alternative. b. Repeat (a) using the shortest life approach. c. Repeat (a) using the longest life approach. d. Repeat (a) using a standard planning horizon of 2 years. e. Repeat (a) using a standard planning horizon of 5 years. Chapter 4, Problem 007 Please Note: this solution shows the solution to the problem with one particular set of values. These values may not match those in the problem you have been given to solve. Problem Statement Alternatives 1, 2, and 3 have lives of 3, 4, and 6 years, respectively. Their net cash flow (NCF) and salvage value (SV) profiles are as follows: Alternative 1 Alternative 1 Alternative 2 Alternative 2 Alternative 3 Alternative 3 End of Year NCF1 S V1 NCF2 SV2 NCF3 SV3 -$20,000 -$40,000 $40,000 $70,000 $70,000 $8,000 $20,000 $30,000 $30,000 $50,000 $8,000 $20,000 $20,000 $30,000 $30,000 $28,000 $20,000 $10,000 $30,000 $20,000 $20,000 $0 $30,000 $10,000 $30,000 $5,000 $30,000 $2,000 au W NH Additional explanation is necessary: the NCF profile of Alternative 1 that is shown above is the net result of a $20,000/year lease payment payable at the beginning of each year, plus an end-of-year net revenue of $28,000. This lease arrangement may be renewed in 3-year increments; however, premature cancellation of the lease results in a lease termination penalty (cost) of $10,000 at the time of cancellation. The NCFs of all other alternatives are expected to repeat indefinitely as shown. a. If a least-common-multiple-of-lives approach is to be used, specify the planning horizon and the complete set of cash flows for each alternative. b. Repeat (a) using the shortest life approach. c. Repeat (a) using the longest life approach. d. Repeat (a) using a standard planning horizon of 2 years. e. Repeat (a) using a standard planning horizon of 5 years. Solution PROBLEM 4.7 LCM PLANNING HORIZON = 12 YEARS EOY ALT 1 -$20 000.00 28,000 - 20.000 = $8,000 28,000 - 20.000 = 58,000 28,000 - 20.000 = $8,000 28,000 - 20,000 = $8,000 28,000 - 20,000 = $8.000 28,000 - 20,000 = $8,000 28,000 - 20,000 = $8,000 28,000 - 20.000 = $8,000 28,000 - 20,000 = $8,000 10 28,000 - 20,000 = $8,000 28,000 - 20,000 = $8,000 $28 000 DOWN ALT2 -$40 000.00 $20 000.00 $20 000.00 $20 000.00 20,000 - 40,000 = -$20,000 $20 000.00 $20 000.00 $20 000.00 20,000 - 40,000 = -$20,000 $20 000.00 $20 000.00 $20 000.00 $20 000.00 ALT 3 -$70 000.00 $30 000.00 $30 000.00 $30 000.00 $30 000.00 $30 000.00 30,000 2,000 - 70,000 = -$38,000 $30 000.00 $30 000.00 $30 000.00 $30 000.00 $30 000.00 30.000 + 2,000 = $32,000 12 SHORTEST LIFE PLANNING HORIZON = 3 YEARS EOY ALT 1 ALT 2 -$20 000.00 -S40 000.00 28,000 - 20,000 = $8,000 $20 000.00 28,000 - 20,000 = $8,000 $20 000.00 $28 000 20,000 + 10,000 = $30,000 ALT 3 -$70 000.00 $30 000.00 $30 000.00 30,000 + 20,000 = $50,00 LONGEST LIFE PLANNING HORIZON = 6 YEARS WN ALT 1 -$20 000.00 28,000 - 20,000 = $8,000 28,000 - 20,000 = $8,000 28,000 - 20.000 = $8,000 28,000 - 20,000 = $8,000 28,000 - 20,000 = $8,000 $28 000 ALT2 -$40 000.00 $20 000.00 $20 000.00 $20 000.00 20,000 - 40,000 = $20,000 $20 000.00 20,000 + 20,000 = $40,000 ALT 3 -$70 000.00 $30 000.00 $30 000.00 $30 000.00 $30 000.00 $30 000.00 30,000 2,000 = $32,000 STANDARD PLANNING HORIZON = 2 YEARS EOY ALT 1 -$20 000.00 28,000 - 20,000 = $8,000 28,000 - 10,000 = $18,000 ALT 2 -$40 000.00 $20 000.00 20,000 - 20,000 = $40,000 ALT3 $70 000.00 $30 000.00 30,000 - 30,000 = $60,000 STANDARD PLANNING HORIZON = 5 YEARS EOY ALT 1 ALT 2 -$20 000.00 -$40 000.00 28,000 - 20,000 = $8,000 $20 000.00 28,000 - 20,000 = $8,000 $20 000.00 28,000 - 20,000 = $8,000 $20 000.00 20.000 - 40,000 = $20,000 28,000 - 10,000 = $18,000 20,000 + 30,000 = $50,000 ALT 3 $70 000.00 $30 000.00 $30 000.00 $30 000.00 $30 000.00 30,000 5,000 = $35,000 on AWN Chapter 4, Problem 007 Please Note: this solution shows the solution to the problem with one particular set of values. These values may not match those in the problem you have been given to solve. Problem Statement Alternatives 1, 2, and 3 have lives of 3, 4, and 6 years, respectively. Their net cash flow (NCF) and salvage value (SV) profiles are as follows: Alternative 1 Alternative 1 Alternative 2 Alternative 2 Alternative 3 Alternative 3 End of Year NCF1 SV1 NCF2 SV2 NCF3 SV3 -$20,000 -$40,000 $40,000 $70,000 $70,000 $8,000 $20,000 $30,000 $30,000 $50,000 $8,000 $20,000 $30,000 $30,000 WN $20,000 $10,000 $28,000 $20,000 $30,000 $20,000 $10,000 $20,000 $0 $30,000 $30,000 $30,000 + $5,000 $2,000 Additional explanation is necessary: the NCF profile of Alternative 1 that is shown above is the net result of a $20,000/year lease payment payable at the beginning of each year, plus an end-of-year net revenue of $28,000. This lease arrangement may be renewed in 3-year increments; however, premature cancellation of the lease results in a lease termination penalty (cost) of $10,000 at the time of cancellation. The NCFs of all other alternatives are expected to repeat indefinitely as shown. a. If a least-common-multiple-of-lives approach is to be used, specify the planning horizon and the complete set of cash flows for each alternative. b. Repeat (a) using the shortest life approach. c. Repeat (a) using the longest life approach. d. Repeat (a) using a standard planning horizon of 2 years. e. Repeat (a) using a standard planning horizon of 5 years