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  • M2 CPR Olais 1

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    This document presents a present worth analysis and annual worth analysis of four alternatives labeled A, B, C, and D. It calculates the present worth and annual worth of each alternative based on cash flows occurring over 10 years at an interest rate of 12%. It recommends choosing alternative A because it has the highest present worth and therefore also the highest equivalent worth.

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    This document presents a present worth analysis and annual worth analysis of four alternatives labeled A, B, C, and D. It calculates the present worth and annual worth of each alternative based on cash flows occurring over 10 years at an interest rate of 12%. It recommends choosing alternative A because it has the highest present worth and therefore also the highest equivalent worth.

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    © All Rights Reserved
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    11 views3 pages

    M2 CPR Olais 1

    Uploaded by

    Hex
    This document presents a present worth analysis and annual worth analysis of four alternatives labeled A, B, C, and D. It calculates the present worth and annual worth of each alternative based on cash flows occurring over 10 years at an interest rate of 12%. It recommends choosing alternative A because it has the highest present worth and therefore also the highest equivalent worth.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 3

    CE40-2/A3

    01/18/2021
    OLAIS, Neil Martin C.
    2015112502

    CEM/3
    M2-CPR
    M2 - CLASS PRODUCED REVIEWER

    SOLUTION

    Present Worth Analysis


    P P
    ( ) (
     PWA = −150 K + ( 28 K −1 K ) A , 12 % , 10 + 20 K F , 12 % , 10 )
    P P
    = −150 K +27 K ( , 12 % , 10 )+ 20 K ( , 12 % , 10 )
    A F
    ( 1+0.12 )10−1
    =
    −10
    −150 K +27 K 10
    +20 K ((1+ 0.12) )
    ( 0.12 ) ( 1+ 0.12 )
    PWA = $ 8995.49

    This study source was downloaded by 100000843132264 from CourseHero.com on 07-08-2022 04:30:02 GMT -05:00

    https://www.coursehero.com/file/92855440/M2-CPR-OLAIS-1docx/
    P P
    (
     PWB = −85 K + ( 16 K−550 ) A , 12% ,10 +10 K F , 12% ,10 ) ( )
    P P
    ( )
    = −85 K +15,450 A ,12 % , 10 +10 K F , 12 % , 10 ( )
    ( 1+0.12 )10−1
    =
    −10
    −85 K +15,450 10
    +10 K ((1+0.12) )
    ( 0.12 ) ( 1+0.12 )
    PWB = $ 5515.68

    P P
    ( ) (
     PWC = −75 K + ( 15 K −500 ) A ,12 % ,10 +6 K F ,12 % ,10 )
    P P
    = −75 K +14,500 ( , 12 % , 10 )+ 6 K ( , 12 % , 10 )
    A F
    ( 1+0.12 )10−1
    = −75 K +14,500
    −10
    10
    +6 K ((1+0.12) )
    ( 0.12 ) ( 1+ 0.12 )
    PWC = $ 8860.07

    P P
    (
     PWD = −120 K + ( 22 K −700 ) A ,12 % , 10 +10 K F , 12 % , 10 ) ( )
    P P
    ( )
    = −120 K +21,300 A , 12 % , 10 + 11 K F , 12 % , 10 ( )
    ( 1+0.12 )10−1
    = −120 K +21,300
    −10
    10
    +11 K ((1+0.12) )
    ( 0.12 ) ( 1+0.12 )
    PWD = $ 3891.46

    Annual Worth Analysis


    PW A
     AWA = P
    ( , 12 % , 10)
    A
    8995.49
    = ( 1+0.12 )10−1
    10
    ( 0.12 ) ( 1+ 0.12 )
    = $ 1592.06

    This study source was downloaded by 100000843132264 from CourseHero.com on 07-08-2022 04:30:02 GMT -05:00

    https://www.coursehero.com/file/92855440/M2-CPR-OLAIS-1docx/
    PW B
     AWB = P
    ( , 12 % , 10)
    A
    5515.68
    = ( 1+0.12 )10−1
    10
    ( 0.12 ) ( 1+ 0.12 )
    = $ 976.19

    PW C
     AWC = P
    ( , 12 % , 10)
    A
    8860.07
    = ( 1+0.12 )10−1
    10
    ( 0.12 ) ( 1+ 0.12 )
    = $ 1568.09

    PW D
     AWD = P
    ( , 12 % , 10)
    A
    3891.46
    = ( 1+0.12 )10−1
    10
    ( 0.12 ) ( 1+ 0.12 )
    = $ 688.73

    Recommendation: Choose Alternative A, because it has high


    present worth which means it also has a high equivalent worth.

    This study source was downloaded by 100000843132264 from CourseHero.com on 07-08-2022 04:30:02 GMT -05:00

    https://www.coursehero.com/file/92855440/M2-CPR-OLAIS-1docx/
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