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Using Ms Excel, find out which alternative should be selected on the basis of the Present Worth method, if the rate of interest is 7%
Using Ms Excel, find out which alternative should be selected on the basis of the Present Worth method, if the rate of interest is 7% per year. Altirnative 1: Initial purchase price = $3050000, Annual operating cost $40000 at the end of 1st year and increasing by $2000 in the subsequent years till the end of useful life, Annual income = $560000, Salvage value = $1050000, Useful life = 4years. Altirnative 2: Initial purchase price = $4000000, Annual operating cost = $55000, Annual income $600000 at the end of 1st year and increasing by $5000 in the subsequent years till the end of useful life, Salvage value = $1000000, Useful life = 6 years. Altirnative 3: Initial purchase price = $2500000, Annual operating cost $45000 at the end of 1st year and increasing by $3000 in the subsequent years till the end of useful life, Annual income = $120000, Salvage value = $550000, Useful life = 12 years. A. Using Ms Excel , find the the Equivalent Annuity Cash Flow of the most economical one at the interest rate of 7% per year. B. Using Ms Excel , Compare the previuos alternatives in Question 1 on the basis of the future worth analysis, would (the the most economical one at the interest rate of 7% per year) be different to your selection in Q1-A?. C. Draw by your hand Cash flow diagram. D. Write the standard notation of each solution above Using Ms Excel, find out which alternative should be selected on the basis of the Present Worth method, if the rate of interest is 7% per year. Altirnative 1: Initial purchase price = $3050000, Annual operating cost $40000 at the end of 1st year and increasing by $2000 in the subsequent years till the end of useful life, Annual income = $560000, Salvage value = $1050000, Useful life = 4years. Altirnative 2: Initial purchase price = $4000000, Annual operating cost = $55000, Annual income $600000 at the end of 1st year and increasing by $5000 in the subsequent years till the end of useful life, Salvage value = $1000000, Useful life = 6 years. Altirnative 3: Initial purchase price = $2500000, Annual operating cost $45000 at the end of 1st year and increasing by $3000 in the subsequent years till the end of useful life, Annual income = $120000, Salvage value = $550000, Useful life = 12 years. A. Using Ms Excel , find the the Equivalent Annuity Cash Flow of the most economical one at the interest rate of 7% per year. B. Using Ms Excel , Compare the previuos alternatives in Question 1 on the basis of the future worth analysis, would (the the most economical one at the interest rate of 7% per year) be different to your selection in Q1-A?. C. Draw by your hand Cash flow diagram. D. Write the standard notation of each solution above
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