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Evaluating the given investment proposal

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Following are the cash flows (equal in years 1-5) and a MARR for a proposal.

MARR=14%
Year 0 1 2 3 4 5
Cash Flow ($3,250) $500 $750 $1,100 $1,500 $1,200

a. Determine the Present Worth. Based on this, should the proposal be approved or rejected?
b. Determine the Future Worth. Based on this, should the proposal be approved or rejected?
c. Determine the Annual Worth. Based on this, should the proposal be approved or rejected?
d. Determine the Internal Rate of Return. Based on this, should the proposal be approved or rejected?
e. Determine if this proposal should be accepted using a 4-year discounted payback period criterion.

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Solution Summary

Solution analyzes the given investment proposal by PW, FW, AW, IRR and Payback period methods.

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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