Question
Take into consideration three mutually exclusive alternatives A, B, C, and also do-nothing alternative. The cash flows for the alternatives over 10 years are given
Take into consideration three mutually exclusive alternatives A, B, C, and also do-nothing alternative. The cash flows for the alternatives over 10 years are given in the table:
Do a Graphical Analysis to evaluate the alternatives by following the steps:
a) Calculate all the candidates for changeover points.
b) Determine a reasonably large range of interest rates based on your findings in part a) and plot NPW(i) for each alternative for this range of interest rates.
c) Identify the changeover points and construct the choice table.
d) If do-nothing alternative was not an option, what would be the changeover points? Remake the choice table under this speculation.
Year 0 1-10 A B $10,000-$13,000 -$17,000 2,000 3,700 4,500 Year 0 1-10 A B $10,000-$13,000 -$17,000 2,000 3,700 4,500Step by Step Solution
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