As the General Manager of a Manufacturing Company you are considering to add a new line of products which you anticipate will capture a market share for the next 20 years. You consider two potential options: Option A Option B Investment 900,000 600,000 Annual Benefits 150,000 150,000 Annual O&M 35,000 40.000 Salvage Value 100,000 90,000 Line useful Life (yr) 20 10 Project life horizon (yr) 20 20 QUESTIONS 1. Write the equations for NPW (A) and NPW (B) using Compound Interest Factors and undefined interest rate i 2. Find the interest rates which will make NPW (A) and NPW (B) equal to 0 (show how you do it) 3. Using Incremental Analysis find the interest rate which will make NPW (A) = NPW (B) (show how you do it) 4. Assume now that you know the Cost of Capital for your Company is 6%, and you want to maximize the investment's NPW, which option would you choose? (show how you choose) 5. If you know that the Cost of Capital for your Enterprise is 6%, and you want an ROI of at least 20%, would invest in Option A, Option B, or renounce to invest? (show how you choose) As the General Manager of a Manufacturing Company you are considering to add a new line of products which you anticipate will capture a market share for the next 20 years. You consider two potential options: Option A Option B Investment 900,000 600,000 Annual Benefits 150,000 150,000 Annual O&M 35,000 40.000 Salvage Value 100,000 90,000 Line useful Life (yr) 20 10 Project life horizon (yr) 20 20 QUESTIONS 1. Write the equations for NPW (A) and NPW (B) using Compound Interest Factors and undefined interest rate i 2. Find the interest rates which will make NPW (A) and NPW (B) equal to 0 (show how you do it) 3. Using Incremental Analysis find the interest rate which will make NPW (A) = NPW (B) (show how you do it) 4. Assume now that you know the Cost of Capital for your Company is 6%, and you want to maximize the investment's NPW, which option would you choose? (show how you choose) 5. If you know that the Cost of Capital for your Enterprise is 6%, and you want an ROI of at least 20%, would invest in Option A, Option B, or renounce to invest? (show how you choose)