Problem - Equivalent Worth, ROR, and Payback Period Analyses
a) Separately for each of part (a) and part (b) of Problem 5 above perform the following analyses. Whenever applicable, you can do your calculations only with Excel functions.
b) Plot the PW, AW, and FW of the project (on the same plot) versus a reasonably wide range of the MARR that covers positive and negative values of these metrics.
c) Calculate the IRR of the project, and discuss its implication for the project’s acceptability by comparing to the plot.
d) Calculate the ERR of the project assuming an external borrowing/re-investment rate e equal to the MARR= 0.8%. Discuss the project’s acceptability, and also compare and discuss the ERR value versus the IRR value.
e) Perform a simple payback period analysis for the project, supporting it by a plot of the cumulative net cash flow versus the year into the project.
f) Perform a discounted payback analysis of the project, supporting it by a plot of the cumulative net discounted cash flow versus the year into the project.
g) Compare and discuss your results in parts (e) and (f).