Determine the value of will make the net present worth


Assignment:

Question 1. For the cash flow shown below, determine the value of X that will make the Net Present Worth at year 0 equal to $2.000 at an interest rate of 10% per year.

Year

0

1

2

3

4

5

6

7

8

9

Cash Flow

100

100

X

200

300

400

500

1000

700

500

Question 2. A Construction company is considering the two alternative coding systems (X, Y) given below for their new facility. Select the best alternative using the Annual Worth Analysis method at an interest rate of 10 % per year

 

Alternative X

Alternative Y

First cost ($)

-120000

-300000

Annual operating cost ($/year)

-40000

-10000

Salvage value, ($/year)

20000

50000

Life (years)

3

4

Question 3. Compare the two alternatives A and B based on the Net Present Worth Analysis.

Alternative A has a first cost of $20,000, an annual operating cost of S4,000, a salvage value of $1,000 and a lifetime of 4 years.

Alternative B has an initial cost of $25,000. an annual operating cost of $2,000, a salvage value of $4,000 and a lifetime of 6 years.

If the MARR value is 10%, which alternative should be selected?

Question 4. An investment resulted in the following cash flows.

Year

0

1

2

3

4

CF$

-605

100

175

250

325

1- Set up the rate of return relation using the Annual Worth.

2- Compute the Annual Worth for i=10% and 1=15%.

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Microeconomics: Determine the value of will make the net present worth
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