Year 0 copper -$66,000 other -$43,500 1 2 3 4 5 30,000 30,000 30,000 30,000 30,0

Question

Year
0 copper
-$66,000 other
-$43,500 1 2 3 4 5 30,000 30,000 30,000 30,000 30,000 21,000 21,000 21,000 21,000 21,000 Your predicted cash flows are outlinedabove. the MARR is 15% and external interst rateis8%

1. Is it worth buying the fancy,copper-plated equipment?
2. what is the return investment onthe other equipment?

Year
0 copper
-$66,000 other
-$43,500 1 2 3 4 5 30,000 30,000 30,000 30,000 30,000 21,000 21,000 21,000 21,000 21,000 Your predicted cash flows are outlinedabove. the MARR is 15% and external interst rateis8%

1. Is it worth buying the fancy,copper-plated equipment?
2. what is the return investment onthe other equipment?

Year
0 copper
-$66,000 other
-$43,500 1 2 3 4 5 30,000 30,000 30,000 30,000 30,000 21,000 21,000 21,000 21,000 21,000

Explanation / Answer

NPV ofCopper = -$66,000 + $30,000 (PVAF15%, 5)                       = -$66,000 + $30,000 (3.3522)                       = -$66,000 + $100,566                       = $34,566 NPV of Others = -$43,500 +$21,000 (PVAF15%, 5)                       = -$43,500 + $21,000 (3.3522)                       = -$43,500 + $70,396.20                       = $26,896.20 Conclusion: Here the NPV of theCopper is higher than the NPV of the Others. So buying theCopper-Plated equipment is worth. Return on Investment(ROI) = [(Gain from Investment - Cost of Investment) /Cost of Investment] Returns from Investment =$21,000+$21,000+$21,000+$21,000+21,000 Returns (or) Gains from Investment =$105,000 ROI = [($105,000 - $43,500) /$43,500] ROI = 1.41379 NPV ofCopper = -$66,000 + $30,000 (PVAF15%, 5)                       = -$66,000 + $30,000 (3.3522)                       = -$66,000 + $100,566                       = $34,566 NPV of Others = -$43,500 +$21,000 (PVAF15%, 5)                       = -$43,500 + $21,000 (3.3522)                       = -$43,500 + $70,396.20                       = $26,896.20 Conclusion: Here the NPV of theCopper is higher than the NPV of the Others. So buying theCopper-Plated equipment is worth. Return on Investment(ROI) = [(Gain from Investment - Cost of Investment) /Cost of Investment] Returns from Investment =$21,000+$21,000+$21,000+$21,000+21,000 Returns (or) Gains from Investment =$105,000 ROI = [($105,000 - $43,500) /$43,500] ROI = 1.41379

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