hho8e_ewp_20-29a

hho8e_ewp_20-29a - Can be used to assess profitability, but...

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Req. 1 Plan A years Plan B years Plan A % Plan B % Total Present Value × per year × per year Present value of residual value × Req. 2 Req. 3 Plan B: Is based on cash flows, can be used to assess profitability, and takes into account the time value of money. It has none of the weaknesses of the other two models. Is easy to understand, is based on cash flows, and highlights risks. However, it ignores profitability and the time value of money.
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Unformatted text preview: Can be used to assess profitability, but it ignores the time value of money. annual net cash inflows Investment Net present value of Plan B Net Cash Inflow Present value of annuity of equal Present value of annuity of equal Plan A: annual net cash inflows Investment Net present value of Plan A P20-29A (30-45 min) PV factor at i=8%, n=9...
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