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Q1 Which alternative should be chosen if i = 7%? GIVEN Year A 0 -21000 0 -200 -2000 -200 -3500 W N -200 -5000 A
Q1 Which alternative should be chosen if i = 7%? GIVEN Year A 0 -21000 0 -200 -2000 -200 -3500 W N -200 -5000 A -200 -6500 -200 -8000 total -22000 -25000 Q2 Which alternative should be chosen if i= 3% GIVEN Year A CO 0 -21000 0 1 -200 -2000 -200 -3500 W N -200 -5000 -200 -6500 -200 -8000 total -22000 -25000Q3 At what interest rate are A and B equally attractive? GIVEN Year A CO 0 -21000 -200 .2000 N -200 -3500 -200 -5000 A W -200 -6500 5 -200 -800 total -22000 -25000 ( express percentages in decimal form e.g. 8.7256% = 0.087256) Q4 Two outdoor bleacher designs (A and B) both have a similar seating capacity of 2,000 people and useful life of 18 years. Which should be chosen? FOR QUIZ GIVEN Life 18 years 3.00% Construction annual Cost maintenance $20,000 D $250,000 B $350,000 $10,000Q5 Given the following cash flows and a discount (interest) rate of 5%, which alternative should be chosen? GIVEN Year Alternative A Alterantive B 0 -$20,000 -$2,000,000 $12,000 $470,000 NP $12,000 $470,000 $12,000 $470,000 $12,000 $470,000 u A $12,000 $470,000 5% Q6 Comment on the relationship between the interest rate and Present Worth ( PW) analysis Question How much must be invested at a rate of 4% to guarantee an endowed scholarship of $10,000 per year in perpetuity
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