The product development group of a high-tech electronics company developed five

Question

The product development group of a high-tech electronics company developed five proposals for new products. The company wants to expand its product offerings, so it will undertake all projects that are economically attractive at the company's MARR of 12% per year The cash flows (in $1000 units) associated with each project are estimated. Which projects, if any, should the company accept on the basis of a present worth analysis? roject nitial Investment perating Cost, per Year evenue, per Year alvage Value 70 120 170 220 20 ears ears ears years years The present worth of project A is $ The present worth of project B is $ The present worth of project C is S The present worth of project D is $ The present worth of project Eis Project A is(Click to select) Project B is (Click to select- Project C Is (Click to select) Project D (Click to select) Project E accepted rejected

Explanation / Answer

Calculation of present worth of project Year Discount Factor @ 12% Project A Project B Project C Project D Project E Cash flow PV Cash flow PV Cash flow PV Cash flow PV Cash flow PV 0 1 -$400.00 -$400.00 -$1,300.00 -$1,300.00 -$500.00 -$500.00 -$1,500.00 -$1,500.00 -$800.00 -$800.00 1 0.892857143 $280.00 $250.00 $130.00 $116.07 $180.00 $160.71 $180.00 $160.71 $230.00 $205.36 2 0.797193878 $280.00 $223.21 $130.00 $103.64 $180.00 $143.49 $180.00 $143.49 $230.00 $183.35 3 0.711780248 $286.00 $203.57 $130.00 $92.53 $180.00 $128.12 $180.00 $128.12 $230.00 $163.71 4 0.635518078 $130.00 $82.62 $180.00 $114.39 $180.00 $114.39 $270.00 $171.59 5 0.567426856 $130.00 $73.77 $183.00 $103.84 $180.00 $102.14 6 0.506631121 $130.00 $65.86 $180.00 $91.19 7 0.452349215 $130.00 $58.81 $180.00 $81.42 8 0.403883228 $130.00 $52.50 $220.00 $88.85 9 0.360610025 $130.00 $46.88 10 0.321973237 $144.00 $46.36 Present worth $276.78 -$560.96 $150.56 -$589.67 -$75.99 Present worth of Project A $276.78 Present worth of Project B -$560.96 Present worth of Project C $150.56 Present worth of Project D -$589.67 Present worth of Project E -$75.99 Project A is accepted. Project B is rejected. Project C is accepted. Project D is rejected. Project E is rejected.

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