ACT349 F08 TT1 v03 post test for web Privacy Code A

# ACT349 F08 TT1 v03 post test for web Privacy Code A -...

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ACT349 F08 TT1 v03 post test for web Privacy Code A Page 2 of 11 1. Consider this cash flow data on three possible projects A, B, C: A B C Time t -10 -10 -10 0 8 4.8 4 1 4 4.8 4 2 0 4.8 2 3 0 4.8 1 4 0 4.8 0 5 Only one project can be chosen. Your boss uses the payback rule (not the discounted payback rule) to decide between the three projects. You make other calculations using NPV at a hurdle rate of 8% per annum effective. You tell your boss (politely) that your decision method increases the company’s time 0 value by \$X more than the boss’s method would. Calculate X. (A)Less than 8.1000 (B)8.1000 but less than 8.2000 (C)8.2000 but less than 8.3000 (D)8.3000 but less than 8.4000 (E)8.4000 or more (D) A B C Time t (1+h)^(-t) -10 -10 -10 0 1 8 4 . 841 0.925925926 4 4 . 842 0.85733882 0 4 . 823 0.793832241 0 4 . 814 0.735029853 0 4 .
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## This note was uploaded on 09/27/2009 for the course STA ACT349 taught by Professor Sharp during the Fall '05 term at University of Toronto.

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ACT349 F08 TT1 v03 post test for web Privacy Code A -...

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