Question
Four investment alternatives (A, B, C, and D) are under consideration. The present worth (PW) for each alternative is $187,500, $300,000, $225,000, and $262,500. The
Four investment alternatives (A, B, C, and D) are under consideration. The present worth (PW) for each alternative is $187,500, $300,000, $225,000, and $262,500. The payback periods (PP) for the alternatives were 2, 3, 1, and 4 years. The risk levels (RL) associated with each alternative are quite different, with A being most risky, D being least risky, and B and C being equally risky. The weights for PW, PP, and RL have been assigned as 30, 45, and 25. The following ratings have been assigned to each alternative for each factor:
Alternative A | Alternative B | Alternative C | Alternative D | |
PW | 6.3 | 10.0 | 7.5 | 8.8 |
PP | 9.1 | 7.7 | 10.0 | 5.8 |
RL | 7.5 | 9.0 | 9.0 | 10.0 |
Using the weighted factor comparison method, which alternative would be recommended?
| Alternative A |
| Alternative D |
| Alternative B |
| Alternative C |
Enter the values used to determine your answer in part (a). Alternative A Total:
Alternative B Total:
Alternative C Total:
Alternative D Total:
Carry all interim calculations to 5 decimal places and then round your final answers to the nearest whole number. The tolerance is 3%.
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