PIDE Class day/time Name &. Goal Definition is the first step of decision-making

Question

PIDE Class day/time Name &. Goal Definition is the first step of decision-making process A. True B. False 9. "Cash low diagram* is a graphical description of each alternative's cash transactions over a period of time. Therefore, problem statement can be mostly described by its cash flow diagram A. True B. False 10. When n A. True infinity, then P B. Faise Choose only 4 out of 6 problems below. (60 points Total) Extra work wl result in negative credit if it is wrong. Cross out r the unselected problems .. Show details of your work in the space provided. Choose the correct answer or fill in your answer in the space provided for credit (15 points/each main problem) 11. Consider the bebelow cash flow ág mi-5%Use reference point at R3.(15 points total 00 100 100 2 20 10 20 30 value of decreasing gradient 40+10 at point 3 . 17493 .-90.81 C.-$3.02 D.-95.98 E. No correct answer. your answer (10 points) 2

Explanation / Answer

(8) True

Identifying and defining the goal is the first step.

(9) True

The cash flow diagram graphically depicts the cash flows during project life and, if project life and discount rate are given, the problem can be worked out.

(10) False

For infinite period, P = A x (1/i), therefore P/A = 1/i

(11) (B)

Equivalent value of the gradient cash flows at period 3 = - [40 x P/F(5%, 1) + 30 x P/F(5%, 2) + 20 x P/F(5%, 3) + 10 x P/F(5%, 4)]

= - [(40 x 0.9524**) + (30 x 0.9070**) + (20 x 0.8638**) + (10 x 0.8227**)]

= - (38.10 + 27.21 + 17.28 + 8.23)

= - 90.81

**From P/F factor table

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