6.30 For the alternatives shown, determine the sum ofthe cash flows in the Z-X difference column.First cost, $Annual operating cost, $/yearSalvage value, $Life, yearsSystem X-40,000- 12,0006,0003System Z-95,000-5,00014,0006

Given information: First cost of System X is -$40,000 and for Z is -$95,000 Annual operating cost of…

Answered: 6.30 For the alternatives shown,…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Problem 1: Consider the following cash flows and assume i = 10% for all analyses purposes: Project Cash Flows A D -$2,500 -$7,000 -$5,000 -$5,000 1 $650 -$2,500 -$2,000 -$500 2 $650 -$2,000 -$2,000 -$500 $650 -$1,500 -$2,000 $4,000 4 $600 -$1,500 -$2,000 $3,000 5 $600 -$1,500 -$2,000 $3,000 $600 -$1,500 -$2,000 $2,000 7 $300 -$2,000 $3,000 8 $300 a) Compute the project balances for Projects A and D, as a function of project year b) Compute the future worth values for Projects A and D at the end of service life. c) Suppose that Projects B and C are mutually exclusive. Assume also that the required service period is eight years and that the company is considering leasing comparable equipment that has an annual lease expense of $3,000 for the remaining years of the required service period for both projects. Which project is the better choice?
Given the cash flows and information in the table below. Which alternative do you choose (mutually exclusive)? MARR 6% Life (years) 4 A B D Initial Cost CF, years 1-4 PW B 11,000 13,500 14,000 8400 4000 4500 4880 3000 $13,860 $15,593 $16,910 $10,395 B/C 1.26 1.16 1.21 1.24 A-D B-D C-A 1.02 2.63 C-D В-А C-B B/C 1.33 1.02 1.16 0.69
spreadsheet 10.1
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6.30 For the alternatives shown, determine the sum of the cash flows in the Z-X difference column. First cost, $ Annual operating cost, $/year Salvage value, $ Life, years System X -40,000 -12,000 6,000 3 System Z -95,000 -5,000 14,000 6