Question
The product development group of a high-tech electronics company developed five proposals for new products. The company wants to expand its product offerings, so it
The product development group of a high-tech electronics company developed five proposals for new products. The company wants to expand its product offerings, so it will undertake all projects that are economically attractive at the companys interest rate of 15% per year. The cash flows (in $1000 units) associated with each project are estimated. Which projects, if any, should the company accept on the basis of a present worth analysis?
| A | B | C | D | E |
Initial investment, $ | -800 | -510 | -680 | -820 | -900 |
Operating cost, $ per year | -200 | -140 | -280 | -325 | -450 |
Revenue, $/year | 480 | 235 | 500 | 605 | 790 |
Salvage value, $ | 22 | 70 | 105 | ||
Life, years | 3 | 10 | 5 | 8 | 4 |
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