05 ModelHW5

# 05 ModelHW5 - a Determine the NPW of each project using...

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a) Determine the NPW of each project, using i=10% Project Cash Flows Year A NPW(A) B NPW(B) C NPW(C) D 0 \$(1,000.00) \$(1,000.00) \$(1,000.00) \$(1,000.00) \$(1,000.00) \$(1,000.00) \$(1,000.00) 1 \$- \$- \$600.00 \$545.45 \$(1,200.00) \$(1,090.91) \$900.00 2 \$- \$- \$800.00 \$661.16 \$800.00 \$661.16 \$900.00 3 \$3,000.00 \$2,253.94 \$1,500.00 \$1,126.97 \$1,500.00 \$1,126.97 \$1,800.00 NPW(A)= \$1,253.94 NPW(B)= \$1,333.58 NPW(C)= \$(302.78) NPW(D)= b) Plot present worth as a function of interest rate for project B from 0 to 30% Int. rate NPW (B) 0 \$1,900.00 1% \$1,834.18 2% \$1,770.65 3% \$1,709.31 4% \$1,650.06 5% \$1,592.81 6% \$1,537.46 7% \$1,483.95 8% \$1,432.17 9% \$1,382.08 10% \$1,333.58 11% \$1,286.63 12% \$1,241.14 13% \$1,197.07 14% \$1,154.35 15% \$1,112.93 16% \$1,072.76 17% \$1,033.79 18% \$995.97 19% \$959.26 20% \$923.61 21% \$888.99 22% \$855.35 23% \$822.67 24% \$790.89 25% \$760.00 26% \$729.95 27% \$700.73 28% \$672.29 29% \$644.61 30% \$617.66

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NPW(D) 1/[(1+i)^N] \$(1,000.00) 1 \$818.18 0.91 \$743.80 0.83 \$1,352.37 0.75 \$1,914.35 -0.05 0 0.05 0.1 0.15 0.2 0.25 0.3 \$- \$200.00 \$400.00 \$600.00 \$800.00 \$1,000.00 \$1,200.00 \$1,400.00 \$1,600.00 \$1,800.00 \$2,000.00 NPW (B) NPW (B) Interest Rate (i)
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## This note was uploaded on 05/12/2010 for the course BUSINESS BS515 taught by Professor Johnson during the Fall '09 term at Drexel.

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05 ModelHW5 - a Determine the NPW of each project using...

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