Question
You are considering two investment options as in the table below with the interest rate of 10%. Option A Option B Investment (P) $55,000 $70,000
You are considering two investment options as in the table below with the interest rate of 10%.
| Option A | Option B |
Investment (P) | $55,000 | $70,000 |
Revenues | $16,500 | $16,800 |
Expenses | $4,000 | $5,200 |
Salvage | $25,000 | $27,000 |
Useful Life | 4 | 8 |
Calculate the annual worth (AW) of option B, assuming the repeatability for the useful life of 16 years.
A. | $535 | |
B. | $841 | |
C. | $856 | |
D. | $6,571 |
You are considering two investment options as in the table below with the interest rate of 10%.
| Option A | Option B |
Investment (P) | $55,000 | $70,000 |
Revenues | $16,500 | $16,800 |
Expenses | $4,000 | $5,200 |
Salvage | $25,000 | $27,000 |
Useful Life | 4 | 8 |
Calculate the present worth (PW) of option A, assuming the repeatability for the useful life of 16 years.
A. | $512 | |
B. | $856 | |
C. | $1,700 | |
D. | $4,193 |
You are considering two investment options as in the table below with the interest rate of 10%.
| Option A | Option B |
Investment (P) | $55,000 | $70,000 |
Revenues | $16,500 | $16,800 |
Expenses | $4,000 | $5,200 |
Salvage | $25,000 | $27,000 |
Useful Life | 4 | 8 |
Calculate the present worth (PW) of option B, assuming the repeatability for the useful life of 16 years.
A. | $2,700 | |
B. | $4,352 | |
C. | $4,480 | |
D. | $6,571 |
You are considering two investment options as in the table below with the interest rate of 10%.
| Option A | Option B |
Investment (P) | $55,000 | $70,000 |
Revenues | $16,500 | $16,800 |
Expenses | $4,000 | $5,200 |
Salvage | $25,000 | $27,000 |
Useful Life | 4 | 8 |
Based on the previous results, which option should you select?
A. | Option A | |
B. | Option B | |
C. | Both options are equal | |
D. | Cannot determine |
What is the closest IRR for the following cash flows?
Year End | 0 | 1 | 2 | 3 | 4 |
Cash Flow ($) | -$3,951 | $1,300 | $1,300 | $1,300 | $1,300 |
A. | 10% | |
B. | 11% | |
C. | 12% | |
D. | 13% |
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