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midterm_solutionMS261_F10

midterm_solutionMS261_F10 - MSCI261 Fall 2010 Midterm...

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MSCI261 Fall 2010 Midterm Solution Question 1 1. C 2. C 3. D 4. D Question 2 a. b. A = 10,000(A/F, 10%, 5) = 1,638 c. X = 20,000 500(P/A, 1%, 30) = 7096 d. P = [8,000 + 1,000*(A/G, 10%, 6)](P/A, 10, 6) = 44,257 Question 3 b. P = 65,000 + 5,000(P/F, 10%, 7) + 20,000(P/A, 10%, 7) 2,500 * = $19,867 Question 4 a. SUMY: ROVNO: PSEL: Choose ROVNO since it has smallest payback period. b. PW(SUMY) = 1,000 + 10*50(P/A, 10%, 3) = 243.45 PW(ROVNO) = 1,200 + 10*70(P/A, 10%, 3) = 540.83 PW(PSEL) = 1,500 + 10*80(P/A, 10%, 3) = 478.52 Choose ROVNO since it has largest present worth.
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Question 5 a. X = Where = = 11.65% = = 9.52% b. If x 3, do not produce since not profitable Otherwise produce Question 6 AW(normal) = 22,000(A/P, 10%, 5) + 8,000 (A/F, 10%, 5) 7,500 1,500 = 13,493 AW(high efficiency) = 30,000(A/P, 10%, 5) + 10,000(A/F, 10%, 5) 4,500 2,500 = 13, 276 Choose high efficiency since it has higher lower cost Question 7 LCM = 12 years PW(A) = [
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