1. Use the Excel® SOLVER tool to determine the DPBP for the SMP investment.

Figure 4.10 shows a spreadsheet with the relevant input parameters.

Transcribed Image Text:

B12 1 MARR: 2 # years used: fx =PV(B1,B8,-B10,-B11)-B9 3 Annual Investment: 4 Annual Savings: 5 Salvage Value geometric: 6 Present Worth: 7 8 # years used: 9 Annual Investment: 10 Annual Savings: 11 Salvage Value gradient: 12 Present Worth: 13 The difference in present worths 14 is due to round-off error in the 15 geometric series rate needed 16 to obtain exactly a $50,000 17 salvage value after 10 years. 18 19 20 21 22 B 10% 10 = DPBP $500,000 $92,500 $49,794 =B3*(1-0.206)^B2 $87,570.11 =PV(B1, B2,-B4,-B5)-B3 10 = DPBP $500,000 $92,500 $50,000 =B9-B8*45000 $87,649.62=PV(B1,B8,-B10,-B11)-B9 Solver Parameters Set Target Cell: Equal To: By Changing Cells: $B$8 D E F G H $B$12 Max Min Value of: 0 Subject to the Constraints: Solve Close Guess Options Add 23 X