Question

Consider the independent investment projects in the table below.

MARR=9​% per year.

       Project Cash Flows  
n   A   B   C
0   -$250   -$120   $135
1   $50   $70   -$45
2   $50   $70   -$45
3   $50   $70   -$45
4   -$125   $30  
5   $500   $30  
6   $500      

MARR=13​% per year.

​(a) For a MARR of 9​%, compute the net present worth for each​ project, and determine the acceptability of each project. Select the correct choices from the​ drop-down menus below and fill in the answer boxes to complete your answer. ​(Round to the nearest​ cent.)

Project	PW		Is​ acceptable?
A	​ $_____?		▼ No Yes

Answer 1

Project A

PW = -250 + 50(P/A,9%,3) -125(P/F,9%,4) + 500(P/F,9%,5) + 500(P/F,9%,6)

Using Discrete compound interest factor tables

PW = -250 + 50(2.531) -125(0.7084) + 500(0.6499) + 500(0.5963)

PW = $411.1

Project B

PW = -120 + 70(P/A,9%,3) + 300(P/F,9%,4) + 300(P/F,9%,5)

Using Discrete compound interest factor tables

PW = -120 + 70(2.531) + 300(0.7084) + 300(0.6499)

PW = $464.66

Project C

PW = 135 - 45(P/A,9%,3)

Using Discrete compound interest factor tables

PW = 135 - 45(2.531)

PW = 21.11

Project	PW ($)	Is Acceptable [Yes\No]
A	411.1	Yes
B	464.66	Yes
C	21.11	Yes

Since all the projects have a positive PW all are acceptable.