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# suggestedquestions - 9.16 P =65 000 P/A 9 5 200(P/G 9 5 500...

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9.16

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P =65, 000( P/A, 9%, 5) +200 (P/G, 9%, 5) +500 shares of stock = 254, 272 + 500 shares of stock F = 257, 272 (F/P, 9%, 5) + 500 shares (60/share) =421, 325 Generous Electric F = 62, 000 (F/A, 9%, 5) + 600 shares of stock = 371, 070 + 600 shares of stock Set F Fearless = F GE 600 shares of GE stock + 371, 070 =421, 325 Required Value of GE stock =83.76/share 9.54 NPW Solution: NPW A = 75/0.10 – 500 = 250 NPW B = 75 ( P/A, 10%, n ) – 300 =250
( P/A, 10%, n ) = 550/75 From the 10% table, n =13.9 yrs. 10.3 Mean Life = (12 + 4*5+4)/6 =6 yrs PW of Cost= PW of Benefits 80, 000 = 20, 000*( P/A, I%, 6 ) Rate of Return is between 12% and 15% Rate of Return is approximately 13 % 10.11 Expected outcome = 2000*0.3 + 1500*0.1 + 1000* 0.2 +500*0.3 +0*0.1=1100 10.19 E( first cost ) = 300, 000(0.2) + 400, 000(0.5) + 600, 000 (0.3) =440K E(Net revenue)=70,000(0.3) + 90, 000(0.5) + 100, 000 (0.2) =86K E(PW)=-440K + 86K(P/A, 12%, 10)=45.9K, do it. 11.7

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## This note was uploaded on 01/24/2011 for the course IE 226 taught by Professor Tonkay during the Spring '09 term at Lehigh University .

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suggestedquestions - 9.16 P =65 000 P/A 9 5 200(P/G 9 5 500...

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