What is the present worth of the accepted proposal

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On-Site Testing Service has received four investment proposals for consideration. Two of the proposals, X1 and X2 are mutually exclusive. The other two proposals, Y1 and Y2 are also mutually exclusive.

Proposal Y1 is contingent on X1, and Y2 is contingent on X2. Other than these restrictions, any combination of proposals (including null) is feasible.

MARR is 7.00%/year. The expected cash flows for the proposals are shown below. A present worth analysis is to be conducted.

End of year

X1 X2 Y1

Y2

0 -$11000 -$14,000 -$6000 -$6000
1 through 8 $2400 $1800 $2900 $3500

a. How many alternatives are possible (feasible and non-feasible)?

b. Use present worth analysis to determine which (if any) proposals On-Site Testing should accept

None ?

X2 and Y2?

X1 only ?

X2 only ?

X1 and Y1?

c. From computation in part b., what is the present worth of the accepted proposal?

Reference no: EM131985188

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