any conclusions. Part B contains 60 multiple choice questions, each of which is
ID: 2562126 • Letter: A
Question
any conclusions. Part B contains 60 multiple choice questions, each of which is worth 1 mark. Use the scantron sheet for Part B. scantron sheet. Detach the first page of this t Be sure to fill in the name and ID # portions of the est and hand it in along with the scantron sheet Part A-Question 1 (17 marks) A project will involve an initial outflow of $15 million and have an economic life of 25 years. On- going inflows (in million S/year) are expected to follow the pattern in the cash flow diagram on the left below. Ongoing outflows (in million S/year) are expected to follow the pattern in the cash flow diagram on the right below. Find the present worth of the project if the MARR-10%. R.2 2. 3 25Explanation / Answer
NPV '@10 %
Year
Cash Inflow
Cash outflow
Cash Flow
PV Factor @ 10 %
PV
0
($15,000,000)
1
($15,000,000)
1
$ 10,000,000
$9,000,000
$ 1,000,000
0.909090909
$909,091
2
$ 10,300,000
$9,000,000
$ 1,300,000
0.826446281
$1,074,380
3
$ 10,600,000
$9,000,000
$ 1,600,000
0.751314801
$1,202,104
4
$ 10,900,000
$9,000,000
$ 1,900,000
0.683013455
$1,297,726
5
$ 11,200,000
$9,000,000
$ 2,200,000
0.620921323
$1,366,027
6
$ 11,500,000
$11,000,000
$ 500,000
0.56447393
$282,237
7
$ 11,800,000
$11,000,000
$ 800,000
0.513158118
$410,526
8
$ 12,100,000
$11,000,000
$ 1,100,000
0.46650738
$513,158
9
$ 12,400,000
$11,000,000
$ 1,400,000
0.424097618
$593,737
10
$ 12,700,000
$11,000,000
$ 1,700,000
0.385543289
$655,424
11
$ 13,000,000
$11,000,000
$ 2,000,000
0.350493899
$700,988
12
$ 13,300,000
$11,000,000
$ 2,300,000
0.318630818
$732,851
13
$ 13,600,000
$11,000,000
$ 2,600,000
0.28966438
$753,127
14
$ 13,900,000
$11,000,000
$ 2,900,000
0.263331254
$763,661
15
$ 14,200,000
$11,000,000
$ 3,200,000
0.239392049
$766,055
16
$ 14,500,000
$11,000,000
$ 3,500,000
0.217629136
$761,702
17
$ 14,800,000
$11,000,000
$ 3,800,000
0.197844669
$751,810
18
$ 15,100,000
$11,000,000
$ 4,100,000
0.17985879
$737,421
19
$ 15,400,000
$11,000,000
$ 4,400,000
0.163507991
$719,435
20
$ 15,700,000
$11,000,000
$ 4,700,000
0.148643628
$698,625
21
$ 16,000,000
$11,000,000
$ 5,000,000
0.135130571
$675,653
22
$ 16,300,000
$11,000,000
$ 5,300,000
0.122845974
$651,084
23
$ 16,600,000
$11,000,000
$ 5,600,000
0.111678158
$625,398
24
$ 16,900,000
$11,000,000
$ 5,900,000
0.101525598
$599,001
25
$ 17,200,000
$11,000,000
$ 6,200,000
0.092295998
$572,235
NPV
$3,813,454
Calculation of PV factor:
Year 1st
PV factor = 1/ (1+0.10)
= 1/1.1 = 0.909090909
Year 2nd
PV factor = 1/ (1+0.10)2
= 1/ (1.10)2
= 1/1.21 = 0.826446281
Year 3rd
PV factor = 1/ (1+0.10)3
= 1/ (1.10)3
= 1/1331 = 0.751314801
And so on….
NPV '@10 %
Year
Cash Inflow
Cash outflow
Cash Flow
PV Factor @ 10 %
PV
0
($15,000,000)
1
($15,000,000)
1
$ 10,000,000
$9,000,000
$ 1,000,000
0.909090909
$909,091
2
$ 10,300,000
$9,000,000
$ 1,300,000
0.826446281
$1,074,380
3
$ 10,600,000
$9,000,000
$ 1,600,000
0.751314801
$1,202,104
4
$ 10,900,000
$9,000,000
$ 1,900,000
0.683013455
$1,297,726
5
$ 11,200,000
$9,000,000
$ 2,200,000
0.620921323
$1,366,027
6
$ 11,500,000
$11,000,000
$ 500,000
0.56447393
$282,237
7
$ 11,800,000
$11,000,000
$ 800,000
0.513158118
$410,526
8
$ 12,100,000
$11,000,000
$ 1,100,000
0.46650738
$513,158
9
$ 12,400,000
$11,000,000
$ 1,400,000
0.424097618
$593,737
10
$ 12,700,000
$11,000,000
$ 1,700,000
0.385543289
$655,424
11
$ 13,000,000
$11,000,000
$ 2,000,000
0.350493899
$700,988
12
$ 13,300,000
$11,000,000
$ 2,300,000
0.318630818
$732,851
13
$ 13,600,000
$11,000,000
$ 2,600,000
0.28966438
$753,127
14
$ 13,900,000
$11,000,000
$ 2,900,000
0.263331254
$763,661
15
$ 14,200,000
$11,000,000
$ 3,200,000
0.239392049
$766,055
16
$ 14,500,000
$11,000,000
$ 3,500,000
0.217629136
$761,702
17
$ 14,800,000
$11,000,000
$ 3,800,000
0.197844669
$751,810
18
$ 15,100,000
$11,000,000
$ 4,100,000
0.17985879
$737,421
19
$ 15,400,000
$11,000,000
$ 4,400,000
0.163507991
$719,435
20
$ 15,700,000
$11,000,000
$ 4,700,000
0.148643628
$698,625
21
$ 16,000,000
$11,000,000
$ 5,000,000
0.135130571
$675,653
22
$ 16,300,000
$11,000,000
$ 5,300,000
0.122845974
$651,084
23
$ 16,600,000
$11,000,000
$ 5,600,000
0.111678158
$625,398
24
$ 16,900,000
$11,000,000
$ 5,900,000
0.101525598
$599,001
25
$ 17,200,000
$11,000,000
$ 6,200,000
0.092295998
$572,235
NPV
$3,813,454
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