document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1135985>Question 1135985</A>: <I><SPAN STYLE=\"word-break: break-all;\"> Marie who is a business woman seeks to invest her money in any of two projects X and Y whose estimated cash flows are as follows: Project X will yield uniform cash flows of Ksh. 20,000 Per year for four years. Project Y cash flows are Ksh.30,000 in year 1, Ksh.22, 000 in year 2, Ksh.18,000 in year 3 and Ksh.15,000 in the fourth year. Advice the business woman on which project to invest in on using the net present value (NPV). </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #753801 by </B><A HREF=/tutors/aboutme.mpl?userid=Theo><B>Theo(13342)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=Theo><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=Theo><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=753801\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> if you're doing a net present value analysis, you need to know what the required rate of return is.\r<BR>\n" );
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document.write( "that wasn't mentioned.\r<BR>\n" );
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document.write( "without knowing that, you can probably make an estimation at different rates of return to see where the break even point would be.\r<BR>\n" );
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document.write( "you can take the npv of plan x and the npv of plan y and determine which one is greater by comparing them.\r<BR>\n" );
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document.write( "you can also take the npv of (plan x minus plan y) and look for when the npv becomes positive.\r<BR>\n" );
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document.write( "a positive npv in a plan x minus plan y analysis means that the npv of plan x is greater than the npv of plan y.\r<BR>\n" );
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document.write( "a negative npv in a plan x minus plan y analysis means that the npv of plan x is less than the npv of plan y.\r<BR>\n" );
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document.write( "the woman is more than likely looking for a rate of return that is positive.\r<BR>\n" );
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document.write( "i therefore looked at different rates of return greater than or equal to 0.\r<BR>\n" );
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document.write( "in all cases, plan y gave a greater npv than plan x.\r<BR>\n" );
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document.write( "as the rate of return requirement got higher, the difference between plan x and plan y became greater in favor of plan x.\r<BR>\n" );
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document.write( "this indicates that there is no positive rate of return requirement where plan x will have a higher npv than plan y.\r<BR>\n" );
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document.write( "since plan y has a greater npv at all rates of return greater than or equal to 0, the woman is advised to go with plan y.\r<BR>\n" );
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document.write( "here's my excel spreadsheet analysis.\r<BR>\n" );
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document.write( "<IMG STYLE=\"max-width:80%;\" src = \"http://theo.x10hosting.com/2019/030503.jpg\" alt=\"$$$\" >\r<BR>\n" );
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