Check my work 4 The product development group of a high-tech electronics company
ID: 2820225 • Letter: C
Question
Check my work 4 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 company's MARR 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? 10 points nitial Investment Operating Cost, per Year Revenue, per Year $-660 $400 5 years $-820 $290 eBook Hint Print $35 vage Value 3years 10 years 8 years The present worth of project A is $ The present worth of project B is$ -. The present worth of project C is The present worth of project D is $ The present worth of project E is $Explanation / Answer
As per rules I will answer the first 4 subparts of the question
PV of the projects are computed as follows
-Initial cost -Annual operating cost*(P/A,n,i)+ Revenue*(P/A,n,i) + Salvage*(P/F,n,i)
Where n = number of years, I = MARR
1: PV of Project A = -200- 100*(P/A,3,15%)+ 350*(P/A,3,15%) + 6*(P/F,3,15%)
= -200+100*2.283 + 350*2.283 + 6*0.6575
=831.30
2: PV of Project B = -510- 160*(P/A,10,15%)+ 275*(P/A,10,15%) + 16*(P/F,10,15%)
= -510- 160*5.019+275*5.019 + 16*0.2472
=$71.14
3: : PV of Project C = -660- 320*(P/A,5,15%)+ 400*(P/A,5,15%) + 4*(P/F,5,15%)
= -660-320*3.352 + 400*3.352+ 4*0.4972
=-389.85
4: PV of Project C = -820- 290*(P/A,8,15%)+ 350*(P/A,8,15%) + 80*(P/F,8,15%)
= -820- 290* 4.487 + 350* 4.487+ 80*0 .3269
=-524.63