The value of the future worth for alternative X at an interest rate of 12% per year is closest to: X First cost, $ -15,000 -35,000 Annual operating cost, $ per year -9,000 -7,000 Salvage value, $ 2,000 5,000 Life, years 3 6 Select one: O a. -180,750 O b. -118,908 O c. -98,870 O d. 150,350 Y

U.S. Census Bureau statistics show that the annual earnings for persons with a high school diploma are $35, 220 versus $57, 925 for someone with a bachelor’s degree. If the cost of attending college is assumed to be $35, 000 per year for 4 years and the forgone earnings during those years are assumed to be $35, 220 per year, what rate of return does earning a bachelor’s degree represent? Use a 25-year study period. In your analysis, you are expected to: (i) Use Excel to display the cash flow; (ii) Draw a Cash Flow Diagram; (iii) Use Excel to compute the internal rate of return of the CFD. (Hint: The investment in years 1 through 4 is the cost of college plus the foregone earnings, and the income in years 5 through 25 is the difference in income between a high school diploma and a bachelor’s degree.) Use excel

The time line represents which investment scenario? 1 3 4 Today year years years years + $800 $800 $800 $800 $80 $80 $80 $8000 invested annually for 4 years in a O a) fund that pays 9% interest per year, compounded annually $8000 invested annually for 4 years in a b) fund that pays 18% per year, compounded semin annually $8000 invested annually for 4 years in a c) fund that pays 9% interest per year, compounded monthly $8000 invested annually for 1 year in a d) fund that pays 36% per year, compounded quarterly 2.

M2.

A company that manufactures magnetic membrane switches is investigating two production options that have the estimated cash flows shown ($1 million units). Which one should be selected on the basis of a present worth analysis at 10% per year? In-house Contract First Cost, $ -30 Annual Cost, $ per year -5 -2 Annual Income, $ per year 14 3.1 Salvage Value, $ 2 Life. years 5 Approximately, what is the value of (P) if A-340, n=9 years, and i= 8% per year? O a. 2847 O b. 2549 O c. 1763 O d. 2124

For the cash flows shown, determine the incremental cash flow between machines B and A for (a) year 0, (b) in year 3, and (c) in year 6. Machine First Cost, $ АОС, $/year Salvage value, $ 3,000 Life, years B -15,000 -25,000 -1,600 -400 6,000 3 4 O (a) = -10000 (b) = -1800 (c) = 1200 %3D !3! O (a) = -10000 (b) = 13200 (c) = 4200 !3! %3! O (a) = -10000 (b) = 13200 (c) =6000 %3! %3D O (a) = -10000 (b) = 13200 (c) = 13200 %3D

For each of the following problems, (a) draw the cash flow diagram; (b) present clean and clear manual solutions to the problem; (c) highlight the final answer (only the final answer as required by the problem) by enclosing it within a box. How much could Company D afford to spend on new equipment each year for the next 8 years if it expects a profit of $50 million 5 years from now? Assume the company’s MARR is 15% per year.

M10

For the net cash flow and cumulative cash flows shown, the value of x is nearest: (a) $−8,000 (b) $−16,000 (c) $16,000 (d) $41,000 Year 1 2 3 4 5 Net Cash Flow, $ +13,000 −29,000 −25,000 50,000 x CCF, $ +13,000 −16,000 −41,000 +9000 +1000

Jane Smart plans to make the following deposits in an account towards cash purchase of a real estate property. 3 EOY Deposit $22,000 1 $6,000 2 $14,000 4 $30,000 5 $38,000 (a) How much money will the account have immediately after the last deposit if the account earns an interest rate of 10% per year? (b) What is the equivalent uniform annual deposit? (a) The amount in the account after the last deposit is $125039 (to the nearest dollar). (b) The equivalent uniform annual deposit is $ (to the nearest dollar)