Homework 3 Solution - HW 4 EE366 McCann Park 4th Edition...

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HW 4 EE366 McCann Park 4 th Edition 5.3: a) A: -$2500+8($300) = -$100 Payback = never B: 1 years = -$1000 and 2 years = +$500. Payback is 2 years or 1.67 years if fractional years are used. C: 2 years = -$1500 and 3 years = +$500. Payback is 3 years or 2.75 years. D: Payback does not deal well with this situation. Payback is 1 year (or 0.8 year) because this is the first point where the net cash flow is p;ositive; however, the project does not ultimately breakeven until year 7. 5.9: Net annual savings = $1550k - 350k - -150k = $1050 NPW = -$3500k + 1050(P/A, 18%, 10) + 200 (P/F, 18%, 10) NPW = -$3500 + 4720 + 38 = $1,257k 5.21: a) NPW(A) = -$400+150(P/A, 10%, 2) + 350(1.1) -3 – 200(1.1) -4 + 400(1.1) -5 + 300 (1.1) -6 = -$400 + 260.3 + 263.0 – 136.6 + 248.4 + 169.3 = $404.40 NPW(B) = -300 + 348.2 + 143.4 = $191.6 NPW(C) = 100 – 99.48 = $0.52 b) NFW(A at year 6) = $404.4 (1.1) 6 = $716.4 NFW(B at year 5) = $191.6 (1.1) 5 = $308.6 NFW(C at year 3) = $0.52 (1.1) 3 = $0.69 Note:
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Homework 3 Solution - HW 4 EE366 McCann Park 4th Edition...

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