1. Tom International, LLC has developed pessimistic, most likely, and optimistic

Question

1.Tom International, LLC has developed pessimistic, most likely, and optimistic estimates for a project. The cost and benefit data are given in the table below. What is the expected NPW for this project using an MARR =10%?

           

Data

Pessimistic

Most Likely

Optimistic

First Cost, $

1,500

1,000

800

Benefits / Year, $

   250

    450

500

Life, Years

       6

        8

10

Data

Pessimistic

Most Likely

Optimistic

First Cost, $

1,500

1,000

800

Benefits / Year, $

   250

    450

500

Life, Years

       6

        8

10

Explanation / Answer

Statement showing calculation of NPW

Pessimistic Most likely Optimistic PVAF 4.3553 5.3349 6.1446 Benefits 250 450 500 PV of benefits 1088.825 2400.705 3072.3 Cost 1500 1000 800 NPW (PV of benefit - cost) - 411.175 1400.705 2272.30

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