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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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