Question
Your company is considering two projects, A and B. Neither project has a salvage value. Project...
Your company is considering two projects, A and B. Neither project has a salvage value.
|
Project A |
Project B |
|
|
Initial Investment |
$10,000 |
$15,000 |
|
Annual Revenue |
$2,000 |
$4,000 |
|
Annual Cost |
$400 |
$1,200 |
|
Useful Life |
15 years |
18 years |
Given a MARR of 10%, and uing the cotermination assumptions and a study period of 15 years, answer the following questions:
a) What is the imputed market value of Project B at the end of the study period?
b) What is the present worth of Project A?
c) What is the present worth of Project B?
Please show work in excel
Homework Answers
Answer #1
(A)
Present Worth of Project B = $7,963.95
The imputed value after 15 years = $7,963.95 * ( 1 +0.10)15 = $33,267.41
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