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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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