Present worth analysis problems and solutions PDF

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How do you solve the present worth method?
How is present worth analysis used for projects?
What is worth analysis?
What are the conditions for present worth comparison?

PWB = -120,000 -8,000(P/A,12%,3) + 40,000(P/F,12%,3) = -120,000 -8,000 Buy the site license 5.12 PWvariable = -250,000 -231,000(P/A,15%,6) -140,000(P/F,15%,4) + 50,000(P/F,15%,6) = -250,000 -231,000(3.7845) -140,000(0.5718) + 50,000(0.4323) = $-1,182,656 PWdual = -224,000 -235,000(P/A,15%,6) -26,000(P/F,15%,3) + 10,000(P/F,15%,6) = -224,000 -235,000(3.7845) -26,000(0.6575) + 10,000(0.4323) = $-1,126,130 Select dual speed machine 5.13 PWJX = -205,000 -29,000(P/A,10%,4) -203,000(P/F,10%,2) + 2000(P/F,10%,4) = -205,000 -29,000(3.1699) -203,000(0.8264) + 2000(0.6830) = $-463,320 PWKZ = -235,000 -27,000(P/A,10%,4) + 20,000(P/F,10%,4) = -235,000 -27,000(3.1699) + 20,000(0.6830) = $-306,927

How do you solve the present worth method?

Example of Present Value.

Using the present value formula, the calculation is $2,200 / (1 +. ... .

PV = $2,135.92, or the minimum amount that you would need to be paid today to have $2,200 one year from now. ... .

Alternatively, you could calculate the future value of the $2,000 today in a year's time: 2,000 x 1.03 = $2,060..

How is present worth analysis used for projects?

Present worth is an equivalence method of analysis in which a project's cash flows are discounted to a single present value. It is perhaps the most efficient analysis method we can use for determining project acceptability on an economic basis.

What is worth analysis?

Value analysis is a systematic review of the production, purchasing and product design processes to reduce overall product costs. This can be accomplished through a variety of activities, including the following: Designing products to use lower-tolerance parts that are less expensive. Switching to lower-cost components.

What are the conditions for present worth comparison?

In present worth method of comparison, the cash flows of each alternative will be reduced to time zero by assuming an interest rate i. Then, depending on the type of decision, the best alternative will be selected by comparing the present worth amounts of the alternatives.