# 460hw7 - ISE 460 Spring 2006 Assignement 07 Solution...

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ISE 460 Spring 2006 Assignement 07 Solution 05/12/2009 Page 1 No.1(7.3) N A B C D Cum A Cum B Cum C Cum D r 0 -\$1,500.00 -\$4,000.00 -\$4,500.00 -\$3,000.00 -\$1,500.00 -\$4,000.00 -\$4,500.00 -\$3,000.00 0.1 1 \$300.00 \$2,000.00 \$2,000.00 \$5,000.00 -\$1,200.00 -\$2,000.00 -\$2,500.00 \$2,000.00 2 \$300.00 \$1,500.00 \$2,000.00 \$3,000.00 -\$900.00 -\$500.00 -\$500.00 \$5,000.00 3 \$300.00 \$1,500.00 \$2,000.00 -\$2,000.00 -\$600.00 \$1,000.00 \$1,500.00 \$3,000.00 4 \$300.00 \$500.00 \$5,000.00 \$1,000.00 -\$300.00 \$1,500.00 \$6,500.00 \$4,000.00 5 \$300.00 \$500.00 \$5,000.00 \$1,000.00 \$0.00 \$2,000.00 \$11,500.00 \$5,000.00 6 \$300.00 \$1,500.00 \$2,000.00 \$300.00 \$3,500.00 \$7,000.00 7 \$300.00 \$3,000.00 \$600.00 \$10,000.00 8 \$300.00 \$900.00 You can also interpolate to get partial year answers 2.33 2.25 0.60 b) Not really, as the initial answer depends only on th efirst two years. However, you can assume a second project starting in period 3 Cum 3 -\$2,000.00 -\$2,000.00 4 \$1,000.00 -\$1,000.00 5 \$1,000.00 \$0.00 2 years 6 \$2,000.00 \$2,000.00 7 \$3,000.00 \$5,000.00 8 or, sincee we are not using the time value of money, assume an investment of 5000 -\$5,000.00 Com 1 \$5,000.00 \$0.00 1 year c) \$91.34 \$1,530.46 \$6,357.62 \$5,904.11 NPV(\$A3,F2:F9) PBA PBB PBC PBD 0 -\$3,000.00 1 -\$1,350.00 -\$2,400.00 -\$2,950.00 \$1,700.00 F119*(1+\$A\$120)+F120 2 -\$1,185.00 -\$1,140.00 -\$1,245.00 \$4,870.00 3 -\$1,003.50 \$246.00 \$630.50 \$3,357.00 4 -\$803.85 \$770.60 \$5,693.55 \$4,692.70 5 -\$584.24 \$1,347.66 \$11,262.91 \$6,161.97 6 -\$342.66 \$2,982.43 \$8,778.17 7 -\$76.92 \$12,655.98 8 \$215.38 From graph 7.5 2.8 2.8 0.6 \$5,000.00 \$10,000.00 \$15,000.00 Cum A Cum B 0 1 2 3 4 5 6 7 8 -\$4,000.00 -\$2,000.00 \$0.00 \$2,000.00 \$4,000.00 \$6,000.00 \$8,000.00 \$10,000.00 \$12,000.00 \$14,000.00 PBA PBB PBC PBD

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ISE 460 Spring 2006 Assignement 07 Solution

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