hho8e_ewp_20-33b

hho8e_ewp_20-33b - the time value of money It has none of...

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Req. 1 Plan A years Plan B years Plan A % Plan B % Total Present Value × per year × per year × Req. 2 Req. 3 P20-33B PV factor at i=8%, n=10 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 annual net cash inflows Investment Net present value of Plan B Plan B: Is based on cash flows, can be used to assess profitability, and takes into account
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Unformatted text preview: 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. Can be used to assess profitability, but it ignores the time value of money. Present value of residual value...
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