Question
A Project Summary Table is given for two projects, A and B. Assume i = 0.05. (a) Using a common life cycle, neatly draw and
A Project Summary Table is given for two projects, A and B. Assume i = 0.05.
(a) Using a common life cycle, neatly draw and label a Cash Flow Diagram for EACH Project
(b) Which project has the higher Annual Net Benefit/Annual Cash Flow? Write the solutions first in terms of Interest Factors [e.g., (A/P,i,n)], then the corresponding equations with appropriate values inserted, then the final answer.
(c) Using a single life cycle, write the equation you would use to determine the Rate of Return of Project B, in terms of Interest factors only [e.g., (A/P,i,n)]
(d) Determine the Undiscounted Payback Period of EACH Project
AT B Cash Flow $k $k Initial Costs $40 $30 Annual Revenue $20 $15 Annual O&M $8 $5 Salvage (at Lifetime) $10 $7 LifetimeStep by Step Solution
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