Compare three projects: Write out your solution, by hand (except for the chart), in terms of Interest Factors then with equations/values then with the numerical value of the interest factor. Of course once this is done for a given interest factor-e.g., (P/F,0.05,5)-you can go directly from interest factor to final value in subsequent calculations. Use an effective annual interest rate of 5%. You are encouraged to check your answers with Excel Create a single cash flow table for the three projects described below (5,5, and 10 years, respectively). Also include 10 year cash flows for A and B. That is 6 columns, including "End of Year" 1. A. Cash Type Capital Cost, k$ Revenue, k$/yr 0&M, k$/yr Salvage Value, k$ Lifetime, yr Project A 30 15 7 Project B Project C 75 A G (A 8 & G 2) 4 12 10 Project C Revenue 8,000 first year & increases 2000/year thereafter (i.e., 8,000, 10,000, 12,000,.) Determine the Present Worth of the three alternatives. Use 10 yr cash flows. (Partial Solution Project A- $20,850) (Check your answers with Excel NPV formula) Determine the Annual Cash Flow of each Project. Use the project lifetime cash flow table (but also use the 10 yr cash flow table for Project B to demonstrate that the 5 and 10 year tables give the same answer). (Partial Solution: Project B $-490) (Check your answers with Excel PMT formula) B. C. Compare three projects: Write out your solution, by hand (except for the chart), in terms of Interest Factors then with equations/values then with the numerical value of the interest factor. Of course once this is done for a given interest factor-e.g., (P/F,0.05,5)-you can go directly from interest factor to final value in subsequent calculations. Use an effective annual interest rate of 5%. You are encouraged to check your answers with Excel Create a single cash flow table for the three projects described below (5,5, and 10 years, respectively). Also include 10 year cash flows for A and B. That is 6 columns, including "End of Year" 1. A. Cash Type Capital Cost, k$ Revenue, k$/yr 0&M, k$/yr Salvage Value, k$ Lifetime, yr Project A 30 15 7 Project B Project C 75 A G (A 8 & G 2) 4 12 10 Project C Revenue 8,000 first year & increases 2000/year thereafter (i.e., 8,000, 10,000, 12,000,.) Determine the Present Worth of the three alternatives. Use 10 yr cash flows. (Partial Solution Project A- $20,850) (Check your answers with Excel NPV formula) Determine the Annual Cash Flow of each Project. Use the project lifetime cash flow table (but also use the 10 yr cash flow table for Project B to demonstrate that the 5 and 10 year tables give the same answer). (Partial Solution: Project B $-490) (Check your answers with Excel PMT formula) B. C
