Contemporary Engineering Economics Plus MyLab Engineering with eText -- Access Card Package (6th Edition)
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Chapter 5, Problem 25P

(a):

To determine

Calculate the project balance.

(b):

To determine

Calculate the discount payback period.

(c):

To determine

Calculate the area of negative project balance.

(d):

To determine

Preferable project.

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Consider the following cash flow data for two competing investment projects: (a) At i = 12%, which of the two projects would be a better choice?{b)At i = 22%, which project is chosen by the NPW rule?
Consider the following two mutually exclusive investment projects that have unequal service lives: (a) What assumption(s) do you need in order to compare a set of mutually exclusive investments with unequal service lives?(b) With the assumption(s) defined in (a) and using i = 10%, determine which project should be selected.(c) If your analysis period (study period) is just three years, what should bethe salvage value of Project B at the end of year 3 in order to make the twoalternatives economically indifferent?
Consider the following two mutually exclusive service projects with projectlives of three years and two years, respectively. (The mutually exclusive service projects will have identical revenues for each year of service.) The interest rate is known to be 12%.                             Net Cash Flow                End of Year        Project A          Project B                      0                    -$1,000                -$800                     1                        -400                  -200                     2                        -400              -200+0                     3                -400+200 If the required service period is six years and both projects can be repeated with the given costs and better service projects are unavailable in the future, which project is better and why? Choose from the following options:(a) Select Project B because it will save you $344 in present worth over the required service period.(b) Select Project A because it will cost $1,818…
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