ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Use the future worth formula please!!!
Transcribed Image Text:### Cash Flow Analysis for Investment Alternatives
#### Problem Statement:
Consider the cash flows for two investment alternatives, A and B, assuming an interest rate of 10%.
| Year (n) | Cash Flow A | Cash Flow B |
|----------|-------------|-------------|
| 0 | $2,500.00 | $5,000.00 |
| 1 | $1,000.00 | $1,800.00 |
| 2 | $1,800.00 | $1,800.00 |
| 3 | $1,000.00 | $2,000.00 |
| 4 | $400.00 | $2,000.00 |
#### Task:
Suppose that projects A and B are mutually exclusive. Determine which project would be preferable based on the following criteria:
1. **Future Worth Analysis**
In this scenario, we'd calculate the future value of each project's cash flows at the given interest rate to find out which project yields a higher future worth, allowing for an informed decision on which project to select.
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