EBK CONTEMPORARY ENGINEERING ECONOMICS
EBK CONTEMPORARY ENGINEERING ECONOMICS
6th Edition
ISBN: 9780134123950
Author: Park
Publisher: PEARSON CUSTOM PUB.(CONSIGNMENT)
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Chapter 5, Problem 40P

(a):

To determine

Selection of the project.

(b):

To determine

Calculate the value of X.

(c):

To determine

Evaluation of the project D.

(d):

To determine

Selection of new project.

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CT Corp. is considering two mutually exclusive projects.  Both require an initial investment of P120,000 at t = 0.  Project X has an expected life of 2 years with after-tax cash inflows of P67,000 and P75,000 at the end of Years 1 and 2, respectively.  In addition, Project X can be repeated at the end of Year 2 with no changes in its cash flows.  Project Y has an expected life of 4 years with after-tax cash inflows of P38,500 at the end of each of the next 4 years.  Each project has a WACC of 8%.   Listed below are the requirements for this data set: Using the replacement chain approach, how much is the NPV of Project X? (Round the final answer to the nearest peso. Use the "NPV formula" in excel for exact computation. Otherwise, answer based on rounded pv factors will also be accepted.) Which of the two projects will be more profitable considering the replacement chain approach on the NPV of Project X? Using the equivalent annuity approach, what is the equivalent annuity of Project Y?…
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 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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