Homework 3 Solution

# 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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## This note was uploaded on 04/25/2008 for the course EE 366 taught by Professor Pore during the Spring '08 term at University of Texas.

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

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