Purchase Solution

Net present Value

Not what you're looking for?

Ask Custom Question

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.

Purchase this Solution

Solution Summary

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

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 ...

Purchase this Solution


Free BrainMass Quizzes
Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.