Use the data from the following table, and an interest of 10 percentage per year

Question

Use the data from the following table, and an interest of 10 percentage per year. In comparing the machines on a present worth basis. PW for machine B is closest to: dollar -109.450 dollar -39,8 dollar 22.750 dollar 22.750 dollar 39.850 In comparing the machines on a present worth basis. PW for machine A is approximately: dollar -103,206 dollar -92,264 dollar 7.700 dollar 35.000 dollar 62,500 Which machine should be selected? Neither is good machine A machine B Both are equally good The five alternatives are being evaluated by the rate of return method, using the following information: If alternatives W and X are mutually exclusive and MARR = 13 percentage per year, which one of the two alternatives is preferable? Neither is good alternative X alternative W Both are equally good If all five alternatives ate independent. MARR = 13 percentage per year and the budget is limited to dollar 140, 000. Which W and Z Y and Z V. X and Y W, X and Y Alternative V is comment on Z, and W. X. Y are independent: which alternative (s) should be selected if MARR = 15 percentage per year? Only V V and Z W, 0X and Y V, X, Y and Z lf the alternatives are mutually exclusive and MARR = 15 percentage per year, the alternative (s) to select is (are): V. X and Y Y and Z Y only Z only

Explanation / Answer

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machine A machine B No. of years 6 3 Net Revenue 10000 20000 Cash Inflow I 10000 20000 Salvage Value S 25000 10000 PVIFA (I,n) PVIFA (10,6) PVIFA (10,3) T 4.3553 2.4689 PV factor for salvage value L 0.5645 0.7513 Cash Inflow I*T 43553 49378 Present value Salvage value S*L 14112.5 7513 Total Discounted Cashflow 57666 56891.0 Less: Initial Cost -50000 -80000 ine B should be selected 7666 -23109 Ans 1 Machine B is closest to option C $-22750 Ans 2 machine A is closest to Option C $7700 Ans 3 Machine A is better so option b Machine A should be selected

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