newnansm5 - Chapter 5: Present Worth Analysis 5-1 P = $50...

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Chapter 5: Present Worth Analysis 5-1 P = $50 (P/A, 10%, 4) + $50 (P/G, 10%, 4) = $50 (3.170) + $50 (4.378) = $377.40 5-2 P = $30 + $20 (P/A, 15%, 2) + $30 (P/F, 15%, 3) = $30 + $20 (1.626) + $30 (0.6575) = $82.25 5-3 P = $300 (P/A, 12%, 3) - $100 (P/G, 12%, 3) = $300 (2.402) - $100 (2.221) = $498.50 $50 $10 $15 $200 P $30 $30 $20 P P $30 $20 $10 5-4 Q = $50 (P/A, 12%, 6) (F/P, 12%, 2) = $50 (4.111) (1.254) = $257.76 5-5` P = $50 (P/A, 10%, 6) (P/F, 10%, 3) + $70 (P/F, 10%, 5) + $70 (P/F, 10%, 7) + $70 (P/F, 10%, 9) = $50 (4.355) (0.7513) + $70 (0.6209 + 0.5132 + 0.4241) = $272.67 Alternative Solution P = [$50 (P/A, 10%, 6) + $70(P/F, 10%, 2) + $70 (P/F, 10%, 4) + $70 (P/F, 10%, 6)](P/F, 10%, 3) = [$50 (4.355) + $70 (0.8264 + 0.6830 + 0.5645)] (0.7513) = $272.66 $50 $50 $50 $50 $50 Q P $120 $120 $50 $50 $50 5-6 P = $60 + $60 (P/A, 10%, 4) + $120 (P/F, 10%, 5) = $60 + $60 (3.170) + $120 (0.6209) = $324.71 5-7 P = A 1 (P/A, q, i, n) = A 1 [(1 (1.10) 4 (1.15)-4 )/(0.15 0.10)] = $200 (3.258) = $651.60 5-8 P^ = B/0.10 = 10 B P = P^ (P/F, 10%, 3) = 10 B (0.7513) = 7.51 B ... P P^ B B B ..... $60 $60 $60 $60 $120 P 5-9 P* = G (P/G, i %, 6) P = P* (F/P, i %, 1) Thus: P = G (P/G, i %, 6) (F/P, i %, 1) 5-10 P = F e-rn + F* [(e r 1)/(re rn )] = $500 (0.951229) + $500 [0.051271/0.058092] = $475.61 + 441.29 = $916.90 5-11 The cycle repeats with a cash flow as below: P* G 2G 3G 4G 5G P* P G 2G 3G 4G 5G Carved Equation Carved 1 2 3 $50 $500 P P = {[$400 - $100 (A/G, 8%, 4) + $900 (A/F, 8%, 4)]/0.08 + $1,000} {P/F, 8%, 5} = {[$400 - $100 (1.404) + $900 (0.2219)]/0.08 + $1,000} {0.6806} = $4,588 Alternative Solution: An alternate solution may be appropriate if one assumes that the $1,000 cash flow is a repeating annuity from time 13 to infinity (rather than indicating the repeating decreasing gradient series cycles). In this case P is calculated as: P = [$500 - $100 (A/G, 8%, 4)](P/A, 8%, 8)(P/F, 8%, 4) + $500 (P/F, 8%, 5) + $500 (P/F, 8%, 9) + $1,000 (P/A, 8%, ) (P/F, 8%, 12) = $7,073 5-12 P = $9,000 (P/A, 18%, 10) + $145,000 (P/F, 18%, 10) = $9,000 (4.494) + $145,000 (0.1911) = $68,155.50 5-13 P = $100 (P/A, 6%, 6) + $100 (P/G, 6%, 6) = $100 (4.917) + $100 (11.459) = $1,637.60 A = $9,000 $145,000 P $40 $300 $20 $1,000 5-14 PW of Cost = PW of Benefits P = $750 (P/A, 7%, 20) + 0.1P (P/F, 7%, 20) = $750 (10.594) + 0.1P (0.2584) = $7945 + 0.02584P P = $7945/(1-0.02584) = $7945/0.97416 = $8156 5-15 Determine the cash flow: Year Cash Flow-$4,400 1 $220 2 $1,320 3 $1,980 4 $1,540 NPW = PW of Benefits PW of Cost = $220 (P/F, 6%, 1) + $1,320 (P/F, 6%, 2) + $1,980 (P/F, 6%, 3) + $1,540 (P/F, 6%, 4) - $4,400 = $220 (0.9434) + $1,320 (0.8900) + $1,980 (0.8396) + $1,540 (0.7921) - $4,400 = -$135.41 NPW is negative. Do not purchase equipment....
View Full Document

Page1 / 33

newnansm5 - Chapter 5: Present Worth Analysis 5-1 P = $50...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online