Alternative B - Buy Temporary Buildings PROJECT YEAR TOTAL COST CONSTANT FY08$ D
ID: 1214338 • Letter: A
Question
Alternative B - Buy Temporary Buildings
PROJECT YEAR
TOTAL COST
CONSTANT FY08$
Discount Factor
Present Value of Annual Cost
TYPE VALUE
1
$200,00
BOY
1.0000 $200,000
1
$30,000
MOY
0.9866 $29,598
2
$30,000
MOY
0.9604 $28,812
3
$30,000
MOY
0.9348 $28,044
4
$30,000
MOY
0.9099 $27,297
5
$30,000
MOY
0.8857 $26,571
6
$30,000
MOY
0.8622 $25,866
7
$30,000
MOY
0.8392 $25,176
8
$30,000
MOY
0.8169 $24,507
SUBTOTAL
$440,000
NPV= $415,871
8
-$50,000
EOY
0.8060 -$40,300
Total
$390,000
NPV= $375,571
ADJUSTED ECONOMIC LIFE FOR ALTERNATIVE A
PROJECT YEAR
TOTAL COST CONSTANT FY08$1
DISCOUNT FACTOR
TYPE VALUE
PRESENT VALUE OF ANNUAL COST
1
$50,000
MOY 0.9866
$49,330
2
$50,000
MOY 0.9604
$48,020
3
$50,000
MOY 0.9348
$46,740
4
$50,000
MOY 0.9099
$45,495
5
$50,000
MOY 0.8857
$44,285
6
$50,000
MOY 0.8622
$43,110
7
$50,000
MOY 0.8392
$41,960
8
$50,000
MOY 0.8169
$40,845
TOTAL
$400,000
NPV =
$359,785
NPV An alternative requires $10000 to be paid at the end of year 1, year 2, and year 3. All values are in constant dollars. Using the tables in the chapter, compute the NPV of this alternative. Round intermediate calculations to two decimal places. $32,741 $34,697 $28,560 $27,284
PROJECT YEAR
TOTAL COST
CONSTANT FY08$
Discount Factor
Present Value of Annual Cost
TYPE VALUE
1
$200,00
BOY
1.0000 $200,000
1
$30,000
MOY
0.9866 $29,598
2
$30,000
MOY
0.9604 $28,812
3
$30,000
MOY
0.9348 $28,044
4
$30,000
MOY
0.9099 $27,297
5
$30,000
MOY
0.8857 $26,571
6
$30,000
MOY
0.8622 $25,866
7
$30,000
MOY
0.8392 $25,176
8
$30,000
MOY
0.8169 $24,507
SUBTOTAL
$440,000
NPV= $415,871
8
-$50,000
EOY
0.8060 -$40,300
Total
$390,000
NPV= $375,571
Explanation / Answer
10000*0.9866 + 10000*0.9604 + 10000*0.9348 = 28818
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