The best estimates for two investment opportunities are as follows: Alternative 1 Alternative 2 $X SY...
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The best estimates for two investment opportunities are as follows: Alternative 1 Alternative 2 $X SY (please see the table for your value) $34,000 $25,000 $22,000 $5,000 8 years 4 years 12% 12% Initial investment Net annual return Salvage value. Estimated life MARR a) Show the sensitivity of the annual equivalent worth of the cash flow to MARR by plotting AE (y-axis) against MARR of 8%, 10%, 12%, and 14% (x-axis). Decide which alternative is more desirable. b) If MARR is 12%, show the sensitivity of the annual equivalent worth of the cash flow to estimated life values by plotting AE (y-axis) against estimated life of 4, 8, 12 years (x-axis). Decide which alternative is more desirable. Assume the salvage values and annual operating costs are the same for each life value. c) Compute the break-even value of MARR for two investments. The best estimates for two investment opportunities are as follows: Alternative 1 Alternative 2 $X SY (please see the table for your value) $34,000 $25,000 $22,000 $5,000 8 years 4 years 12% 12% Initial investment Net annual return Salvage value. Estimated life MARR a) Show the sensitivity of the annual equivalent worth of the cash flow to MARR by plotting AE (y-axis) against MARR of 8%, 10%, 12%, and 14% (x-axis). Decide which alternative is more desirable. b) If MARR is 12%, show the sensitivity of the annual equivalent worth of the cash flow to estimated life values by plotting AE (y-axis) against estimated life of 4, 8, 12 years (x-axis). Decide which alternative is more desirable. Assume the salvage values and annual operating costs are the same for each life value. c) Compute the break-even value of MARR for two investments.
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1 Calculate Present Value of Future Cash Flows For both alternatives multiply the annual cash inflows by discount factors at different MARR rates rounded off at 2 decimals Alternative 1 At 8 MARR Cash inflow ... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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