Question

QUESTION 1 X Y Z W V IC $420,000 $540,000 $500,000 $200,000 $250,000 OM $45,000 $35,000 $50,000 $20,000 $40,000 B $110,000 $260,000 $80,000 $180,000 $90,000 D $20,000 $45,000 $10,000 $30,000 $10,000 Life/years 10 20 10 20 15 based on the above ME alternatives and using the B/C analysis, which alternative we should select? i=10%. OX OY OZ OW OV

          QUESTION 1
X
Y
Z
W
V
IC
$420,000
$540,000
$500,000
$200,000
$250,000
OM
$45,000
$35,000
$50,000
$20,000
$40,000
B
$110,000
$260,000
$80,000
$180,000
$90,000
D
$20,000
$45,000
$10,000
$30,000
$10,000
Life/years
10
20
10
20
15
based on the above ME alternatives and using the B/C analysis, which alternative we should select? i=10%.
OX
OY
OZ
OW
OV

QUESTION 1
X
Y
Z
W
V
IC
420,000540,000
500,000200,000
250,000
OM45,000
35,00050,000
20,00040,000
B
110,000260,000
80,000180,000
90,000
D20,000
45,00010,000
30,00010,000
Life/years
10
20
10
20
15
based on the above ME alternatives and using the B/C analysis, which alternative we should select? i=10%.
OX
OY
OZ
OW
OV

Added by David S.

Principles of Economics

Gregory Mankiw 8th Edition

Instant Answer

Solved by Expert Nick Johnson

Step 1

To do this, we use the formula: PV = CF / (1 + i)^n Where PV is the present value, CF is the cash flow, i is the interest rate, and n is the number of years. For alternative TON Y, the cash flows are $420,000, $45,000, $110,000, and $20,000, and the interest Show more…

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Texts: TON Y $420,000 $45,000 $110,000 $20,000 10 Z $540,000 $35,000 $260,000 $45,000 20 W $500,000 $50,000 $80,000 $10,000 10 OMB D Lifalyears $200,000 $20,000 $180,000 $30,000 20 $250,000 $40,000 $90,000 $10,000 15 based on the above ME alternatives and using the B/C analysis, which alternative should we select? i=10% OY