(a)Based on the payback period, which alternative is preferred? (b)Based on future worth analysis, which of the four alternatives is preferred at 5% interest? (c)Based on future worth analysis, which alternative is preferred at 20% interest

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter9: Decision Making Under Uncertainty
Section: Chapter Questions
Problem 30P
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Year E F G H
0 − $90 − $110 − $100 − $120
1 20 35 0 0
2 20 35 10 0
3 20 35 20 0
4 20 35 30 0
5 20 0 40 0
6 20 0 50 180
(a)Based on the payback period, which alternative is preferred?
(b)Based on future worth analysis, which of the four alternatives is preferred at 5% interest?
(c)Based on future worth analysis, which alternative is preferred at 20% interest?
(d)At 10% interest, what is the benefit–cost ratio for Alt. G?
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