A business has $35,000 available to invest. Use a PW analysis. MARR = 6% Life =

Question

A business has $35,000 available to invest. Use a PW analysis. MARR = 6% Life = 3 years. Investment A: Initial investment = $22, 500. Is expected to produce a MONTHLY revenue of $1, 100 Investment B: Initial investment = $15,000. Is expected to produce a MONTHLY revenue of $1,000 Investment C: Initial investment = $11,000. Is expected to produce a MONTHLY revenue of $750 How many bundles are there that do not exceed the maximum expenditure amount in initial investments? Enter a whole number only. For example: X or XY

Explanation / Answer

PVIFA 0.5%, 36 months = 32.8710

Investment A: Present Worth = $ 1,100 x 32.8710 - $ 22,500 = $ 13,658.10

Investment B: Present Worth = $ 1,000 x 32.8710 - $ 15,000 = $ 17,871

Investment C: Present Worth = $ 750 x 32.8710 - $ 11,000 = $ 13,653.25

Investments A & C = $ ( 22,500 + 11,000) = $ 33,500

Investments B & C = $ ( 15,000 + 11,000) = $ 26,000

Hence there are 5 possibilities: A, B, C, AC, BC

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