Contemporary Engineering Economics (6th Edition)
Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 5, Problem 38P

(a):

To determine

Selection of the project based on payback criteria.

(b):

To determine

Selection of the project based on present worth criteria.

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You are considering two investment options. In option A, you have to invest RM5000 now and RM1000 three years from now, In option B, you have to invest RM2500 now, RM1500 a year from now, and RM1000 three years from now. In both options, you will receive four annual payments of RM2000 each. (You will get the first payment a year from now.) Which of these options would you choose based on (a) the conventional payback criterion, and (b) the present worth criterion, assuming 8% interest? Based on conventional payback period method, choose either (A/B/Both) Format: PW Option A Format : PW Option B Format : Format : Based on PW analysis method, choose Option (A or B)
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