Calculate the AE given a project with an outlay of -2000
and cash flows of 1500 per year for 3 years. The discount rate is
0.1. The rate is given as a decimal (eg .12 is 12%). Answer to the
nearest dollar. Do not enter the dollar sign.
Question 2
Use the following information on two mutually exclusive
projects.
Assume a discount rate of 11% pa and replacement of like with like
into the foreseeable future.
Which of the following statements is correct?
Project A should be selected because it has an NPV of an
infinite chain of replacement of $3019 compared with project B
which has an NPV of $2298.
Project A should be selected because it has anAE of $302
compared with project B which has an AE of $253.
Project B should be selected because it has an NPV of $784
compared with project A which has an NPV of $569.
There is not enough information to make a valid decision.
Project B should be selected because it has an NPV over the LCM
(least common multiple) of lives of $784 compared with project A
which has an NPV of $1030.
Project A should be selected because it has an IRR of 32%
compared with project B which has an IRR of 18%.
Calculate the AE given a project with an outlay of -2000 and cash flows of 1500 per year for 3 years. The discount rate
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Calculate the AE given a project with an outlay of -2000 and cash flows of 1500 per year for 3 years. The discount rate
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