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    Net present Value

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    1. Compare the economics of the two following service producing alternatives. Use present worth analysis and incremental analysis. Use NPV at i* = 15% and confirm your answer by calculating the ROR. All numbers are in 1000 of dollars.

    Alternative A
    C=200 OC=220 OC=220 OC=220 OC=220 L=50 Year 0 Year 1 Year 2 Year 3 Year 4

    Alternative B
    C=0 OC=300 OC=300 OC=300 OC=300 L=0 Year 0 Year 1 Year 2 Year 3 Year 4.

    © BrainMass Inc. brainmass.com October 9, 2019, 4:35 pm ad1c9bdddf
    https://brainmass.com/economics/cost-benefit-analysis/applying-net-present-value-36606

    Solution Preview

    Please see the attachment for your response.

    Alternative A
    Year C/OC Discount @15% Present Value
    0 200 1 200
    1 220 0 .8696 191.3
    2 220 0.7561 166.33
    3 220 0.6575 144.65
    4 220 0.5718 125.65
    L 50 0.5718 28.59
    Net present Value 856.69

    Alternative ...

    Solution Summary

    Net present Value is applied and the details are provided in the solution.

    $2.19