ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Question
Chapter 8, Problem 35P
(a)
To determine
To construct:A choice table for interest tables from 0% to 100%
(a)
Expert Solution
Answer to Problem 35P
From table below, from 0% to 6%, Plan B should be preferred. Between 7% to 12% Plan C should be preferred. Beyond that Plan A should be selected
Explanation of Solution
NPV of Plan B
NPV of Plan C
Choice table for interest from 0% to 100%
| Interest rate | (P/A,i,15) | (P/F,i,15) | Plan A | Plan B | Plan C |
| 0% | 15.00 | 1.00 | 314,500 | 401,250 | 353,000 |
| 1% | 13.87 | 0.86 | 277,491 | 349,203 | 310,657 |
| 2% | 12.85 | 0.74 | 244,656 | 302,909 | 273,048 |
| 3% | 11.94 | 0.64 | 215,448 | 261,626 | 239,557 |
| 4% | 11.12 | 0.56 | 189,400 | 224,719 | 209,657 |
| 5% | 10.38 | 0.48 | 166,112 | 191,642 | 182,896 |
| 6% | 9.71 | 0.42 | 145,238 | 161,925 | 158,885 |
| 7% | 9.11 | 0.36 | 126,482 | 135,162 | 137,289 |
| 8% | 8.56 | 0.32 | 109,588 | 111,001 | 117,818 |
| 9% | 8.06 | 0.27 | 94,335 | 89,139 | 100,220 |
| 10% | 7.61 | 0.24 | 80,531 | 69,311 | 84,279 |
| 11% | 7.19 | 0.21 | 68,008 | 51,287 | 69,805 |
| 12% | 6.81 | 0.18 | 56,623 | 34,867 | 56,634 |
| 13% | 6.46 | 0.16 | 46,248 | 19,874 | 44,621 |
| 14% | 6.14 | 0.14 | 36,772 | 6,156 | 33,640 |
| 15% | 5.85 | 0.12 | 28,100 | (6,422) | 23,583 |
| 16% | 5.58 | 0.11 | 20,146 | (17,979) | 14,351 |
| 17% | 5.32 | 0.09 | 12,835 | (28,619) | 5,859 |
| 18% | 5.09 | 0.08 | 6,103 | (38,434) | (1,967) |
| 19% | 4.88 | 0.07 | (110) | (47,505) | (9,194) |
| 20% | 4.68 | 0.06 | (5,855) | (55,905) | (15,880) |
| 21% | 4.49 | 0.06 | (11,176) | (63,697) | (22,078) |
| 22% | 4.32 | 0.05 | (16,114) | (70,938) | (27,833) |
| 23% | 4.15 | 0.04 | (20,705) | (77,678) | (33,186) |
| 24% | 4.00 | 0.04 | (24,981) | (83,964) | (38,175) |
| 25% | 3.86 | 0.04 | (28,970) | (89,835) | (42,832) |
| 26% | 3.73 | 0.03 | (32,698) | (95,328) | (47,185) |
| 27% | 3.60 | 0.03 | (36,187) | (100,474) | (51,262) |
| 28% | 3.48 | 0.02 | (39,458) | (105,303) | (55,086) |
| 29% | 3.37 | 0.02 | (42,528) | (109,841) | (58,677) |
| 30% | 3.27 | 0.02 | (45,416) | (114,112) | (62,055) |
| 31% | 3.17 | 0.02 | (48,134) | (118,137) | (65,237) |
| 32% | 3.08 | 0.02 | (50,697) | (121,934) | (68,238) |
| 33% | 2.99 | 0.01 | (53,117) | (125,523) | (71,073) |
| 34% | 2.90 | 0.01 | (55,405) | (128,918) | (73,753) |
| 35% | 2.83 | 0.01 | (57,571) | (132,134) | (76,291) |
| 36% | 2.75 | 0.01 | (59,623) | (135,183) | (78,697) |
| 37% | 2.68 | 0.01 | (61,571) | (138,078) | (80,981) |
| 38% | 2.61 | 0.01 | (63,421) | (140,830) | (83,151) |
| 39% | 2.55 | 0.01 | (65,180) | (143,449) | (85,215) |
| 40% | 2.48 | 0.01 | (66,854) | (145,942) | (87,180) |
| 41% | 2.42 | 0.01 | (68,450) | (148,320) | (89,053) |
| 42% | 2.37 | 0.01 | (69,973) | (150,589) | (90,840) |
| 43% | 2.31 | 0.00 | (71,426) | (152,757) | (92,547) |
| 44% | 2.26 | 0.00 | (72,816) | (154,829) | (94,179) |
| 45% | 2.21 | 0.00 | (74,145) | (156,812) | (95,740) |
| 46% | 2.17 | 0.00 | (75,417) | (158,712) | (97,235) |
| 47% | 2.12 | 0.00 | (76,637) | (160,532) | (98,668) |
| 48% | 2.08 | 0.00 | (77,806) | (162,279) | (100,042) |
| 49% | 2.04 | 0.00 | (78,929) | (163,956) | (101,361) |
| 50% | 2.00 | 0.00 | (80,007) | (165,567) | (102,628) |
| 51% | 1.96 | 0.00 | (81,043) | (167,117) | (103,847) |
| 52% | 1.92 | 0.00 | (82,040) | (168,607) | (105,019) |
| 53% | 1.88 | 0.00 | (83,000) | (170,042) | (106,147) |
| 54% | 1.85 | 0.00 | (83,925) | (171,425) | (107,234) |
| 55% | 1.82 | 0.00 | (84,816) | (172,758) | (108,282) |
| 56% | 1.78 | 0.00 | (85,675) | (174,044) | (109,293) |
| 57% | 1.75 | 0.00 | (86,505) | (175,286) | (110,269) |
| 58% | 1.72 | 0.00 | (87,306) | (176,485) | (111,211) |
| 59% | 1.69 | 0.00 | (88,080) | (177,644) | (112,121) |
| 60% | 1.67 | 0.00 | (88,828) | (178,764) | (113,002) |
| 61% | 1.64 | 0.00 | (89,552) | (179,848) | (113,853) |
| 62% | 1.61 | 0.00 | (90,253) | (180,897) | (114,678) |
| 63% | 1.59 | 0.00 | (90,931) | (181,913) | (115,476) |
| 64% | 1.56 | 0.00 | (91,589) | (182,898) | (116,249) |
| 65% | 1.54 | 0.00 | (92,226) | (183,852) | (116,999) |
| 66% | 1.51 | 0.00 | (92,844) | (184,778) | (117,726) |
| 67% | 1.49 | 0.00 | (93,443) | (185,676) | (118,431) |
| 68% | 1.47 | 0.00 | (94,025) | (186,548) | (119,116) |
| 69% | 1.45 | 0.00 | (94,590) | (187,394) | (119,781) |
| 70% | 1.43 | 0.00 | (95,139) | (188,217) | (120,427) |
| 71% | 1.41 | 0.00 | (95,672) | (189,016) | (121,054) |
| 72% | 1.39 | 0.00 | (96,191) | (189,793) | (121,665) |
| 73% | 1.37 | 0.00 | (96,695) | (190,549) | (122,258) |
| 74% | 1.35 | 0.00 | (97,186) | (191,285) | (122,836) |
| 75% | 1.33 | 0.00 | (97,663) | (192,001) | (123,398) |
| 76% | 1.32 | 0.00 | (98,128) | (192,698) | (123,946) |
| 77% | 1.30 | 0.00 | (98,581) | (193,377) | (124,479) |
| 78% | 1.28 | 0.00 | (99,023) | (194,039) | (124,998) |
| 79% | 1.27 | 0.00 | (99,453) | (194,684) | (125,505) |
| 80% | 1.25 | 0.00 | (99,872) | (195,312) | (125,998) |
| 81% | 1.23 | 0.00 | (100,282) | (195,926) | (126,480) |
| 82% | 1.22 | 0.00 | (100,681) | (196,524) | (126,950) |
| 83% | 1.20 | 0.00 | (101,070) | (197,108) | (127,408) |
| 84% | 1.19 | 0.00 | (101,450) | (197,678) | (127,856) |
| 85% | 1.18 | 0.00 | (101,822) | (198,235) | (128,293) |
| 86% | 1.16 | 0.00 | (102,184) | (198,779) | (128,720) |
| 87% | 1.15 | 0.00 | (102,539) | (199,310) | (129,137) |
| 88% | 1.14 | 0.00 | (102,885) | (199,829) | (129,544) |
| 89% | 1.12 | 0.00 | (103,223) | (200,337) | (129,943) |
| 90% | 1.11 | 0.00 | (103,554) | (200,833) | (130,332) |
| 91% | 1.10 | 0.00 | (103,878) | (201,318) | (130,713) |
| 92% | 1.09 | 0.00 | (104,194) | (201,793) | (131,086) |
| 93% | 1.08 | 0.00 | (104,504) | (202,258) | (131,451) |
| 94% | 1.06 | 0.00 | (104,807) | (202,712) | (131,808) |
| 95% | 1.05 | 0.00 | (105,104) | (203,158) | (132,157) |
| 96% | 1.04 | 0.00 | (105,395) | (203,593) | (132,499) |
| 97% | 1.03 | 0.00 | (105,680) | (204,020) | (132,834) |
| 98% | 1.02 | 0.00 | (105,958) | (204,438) | (133,163) |
| 99% | 1.01 | 0.00 | (106,232) | (204,848) | (133,484) |
| 100% | 1.00 | 0.00 | (106,499) | (205,250) | (133,799) |
(b)
To determine
To select:the best alternative at expected
(b)
Expert Solution
Answer to Problem 35P
Best alternative at expected rate of return of 10%isPlan A having highest NPV of $84,279.
Explanation of Solution
As per the choice table above, at expected rate of return of 10% Plan C has highest NPV of $84,279 as compared to other plans; hence Plan C should be preferred.
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Chapter 8 Solutions
ENGR.ECONOMIC ANALYSIS
Ch. 8 - Prob. 1QTCCh. 8 - Prob. 2QTCCh. 8 - Prob. 3QTCCh. 8 - Prob. 4QTCCh. 8 - Prob. 5QTCCh. 8 - Prob. 1PCh. 8 - Prob. 2PCh. 8 - Prob. 3PCh. 8 - Prob. 4PCh. 8 - Prob. 5P
Ch. 8 - Prob. 6PCh. 8 - Prob. 7PCh. 8 - Prob. 8PCh. 8 - Prob. 9PCh. 8 - Prob. 10PCh. 8 - Prob. 11PCh. 8 - Prob. 12PCh. 8 - Prob. 13PCh. 8 - Prob. 14PCh. 8 - Prob. 15PCh. 8 - Prob. 16PCh. 8 - Prob. 17PCh. 8 - Prob. 18PCh. 8 - Prob. 19PCh. 8 - Prob. 20PCh. 8 - Prob. 21PCh. 8 - Prob. 22PCh. 8 - Prob. 23PCh. 8 - Prob. 24PCh. 8 - Prob. 25PCh. 8 - Prob. 26PCh. 8 - Prob. 27PCh. 8 - Prob. 28PCh. 8 - Prob. 29PCh. 8 - Prob. 30PCh. 8 - Prob. 31PCh. 8 - Prob. 32PCh. 8 - Prob. 33PCh. 8 - Prob. 34PCh. 8 - Prob. 35PCh. 8 - Prob. 36PCh. 8 - Prob. 37PCh. 8 - Prob. 38PCh. 8 - Prob. 39PCh. 8 - Prob. 40PCh. 8 - Prob. 41PCh. 8 - Prob. 42PCh. 8 - Prob. 43PCh. 8 - Prob. 44PCh. 8 - Prob. 45P
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