Question

# A young software genius is selling the rights to a new video game he has developed....

A young software genius is selling the rights to a new video game he has developed. Two companies have offered him contracts. The first contract offers 8,000 at the end of each year for the next five years, and then 18,000 dollars per year for the following 10 years. The second offers 10 payments, starting with 9,500 at the end of the first year, 12,500 dollars at the end of the second year, and sof forth, increasing by G dollars each year (i.e., the tenth payment will be (9,500 dollars + 9 x G dollars). Assume the genius uses a MARR of 9%. Which contract should the young genius choose? Use a present worth comparison and least common multiple of repeated lives {Perform all calculations using 5 significant figures and round any monetary answers to the nearest cent}.

a.) For one life of project one, the present worth is:

b.) For repeated lives of project one, the present worth is:

c.) For one life of project two the present worth is:

d.) For repeated lives of project two, the present worth is:

Analysis period will be 30 yrs (LCM of 15 & 10)

i = 9%

a. NPW of one life cycle for project 1 = 8000 * (P/A, 9%,5) + 18000 * (P/A, 9%,10) * (P/F, 9%,5)

= 8000 * 3.889651 + 18000 * 6.417658 * 0.649931

= 106195.88

b. NPW for repeated life cycle for project 1 = 106195.88 + 106195.88 *(P/F, 9%,15)

= 106195.88 + 106195.88 * 0.274538

= 135350.69

c. G = 12500 - 9500 = 3000

NPW of one life cycle for project 2 = 9500 * (P/A, 9%,10) + 3000 * (P/G, 9%,10)

= 9500 * 6.417658 + 3000 * 24.372774

= 134086.07

d. NPW for repeated life cycle for project 2 = 134086.07 + 134086.07 * (P/F, 9%,10) + 134086.07 *(P/F, 9%,20)

= 134086.07 + 134086.07 * 0.422411 + 134086.07 * 0.178431

= 214650.60

As the NPW for repeated life cycle for project 2 is more, project 2 should be selected

#### Earn Coins

Coins can be redeemed for fabulous gifts.

##### Need Online Homework Help?

Most questions answered within 1 hours.

##### Active Questions
• Describe research designs used in the area of psychopathology and identify at least two ethical concerns...
asked 9 minutes ago
• Dry ice is solid carbon dioxide. Instead of melting, solid carbon dioxide sublimes according to the...
asked 18 minutes ago
• The patient recovery time from a particular surgical procedure is normally distributed with a mean of...
asked 32 minutes ago
• In a certain school district, it was observed that 26% of the students in the element...
asked 35 minutes ago
• Solve 8cos2(x)+2cos(x)−3=08cos2(x)+2cos(x)-3=0 for all solutions 0≤x<2π0≤x<2π and Solve 6sin2(w)−cos(w)−5=06sin2(w)-cos(w)-5=0 for all solutions 0≤w<2π0≤w<2π
asked 52 minutes ago
• What is the partial molar temperature? What is the partial molar pressure? Express results in relation...
asked 55 minutes ago
• You place 2.7 μC of charge along a long nonconducting rod. The rod extends from x...
asked 1 hour ago
• Treasury stock. Agler Corporation's balance sheet reported the following: Capital stock outstanding, 2,000 shares, par \$60...
asked 1 hour ago
• With clear example, you will need to do comparative time complexity to solve Minimum Spanning Tree...
asked 2 hours ago
• True or False: In an attrition strategy (of terrorism), Terrorists try to convince the population that...
asked 2 hours ago
• what is agency conflicts? When dealing with a company.
asked 2 hours ago
• You wish to measure the concentration of methyl benzoate in a plant stream by gas chromatography....
asked 2 hours ago