Find the present value of the following scenarios

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Reference no: EM13178415

  1. Find the Present Value of the following scenarios:
    a. An Annual Payment of $1500 over 6 years with an interest rate of 5%.
    b. A final payment, in 6 years, of $4500, with an interest rate of 6%.
  2. You are considering a project with initial investment of $91000, annual operating expenses of $10500 and annual revenue of $23500, and a decommissioning/disposal expense of $10000 at the end of life. MARR = 8.5%. Project life = 12 years. Does this project have an acceptable Present Value?
  3. A project is estimated to produce the following cash flow events:
    Initial investment of $30,000, and
    Annual operating cost of $21,000 and
    Annual operating revenue of $29,500 and
    has a service life of 9 years with a salvage value of $2500 at the end of the service life.
    For an interest rate of 7% find:
    a. The Present Value of the project.
    b. The Internal Rate of Return.
  4. A company is considering engineering proposals P1, P2, and P3 with 6 year lives and estimated money flows:

 

Proposal

P1

P2

P3

Investment

$700,000

$320,000

$380,000

Annual revenue

$350,000

$150,000

$280,000

Annual cost

$200,000

$90,000

$120,000

Salvage value

$5,000

$20,000

$10,000

 

The budget limit is $1,100,000.
a.         Develop the matrix of the investment alternatives, indicating which ones are not feasible, and give the reasons.
b.         Find the Present Value of the feasible alternatives. Interest rate 7.5%.
c.         Find the IRR for each feasible alternative.

 

  1. A company is considering engineering proposals P1, P2, and P3 with 5 year lives and estimated money flows:

 

Proposal

P1

P2

P3

Investment

$520,000

$340,000

$380,000

Annual revenue

$230,000

$210,000

$250,000

Annual cost

$100,000

$90,000

$120,000

Salvage value

$10,000

$7,000

$4,000

 

The budget limit is $1,000,000. P2 and P3 are mutually exclusive.
a.          Develop the matrix of the investment alternatives, indicating which ones are not feasible, and give the reasons.
b.          Develop the composite money flows for the feasible alternatives.
c.          Find the preferred alternative for a MARR of 7% using incremental analysis.

Reference no: EM13178415

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