Question 1136366: Calculate the Nominal Payback, the Discounted Payback, the Net Present Value and the IRR for each
scenario assuming:
A. Arnold (A) recommends using the base assumptions above: 3 year project life, flat annual savings,
10% discount rate.
B. Betty (B) recommends savings that grow each year: 3 year project life, 10% discount rate and a 10%
compounded annual savings growth in years 2 & 3. In other words, instead of assuming savings stay
flat, assume that they will grow by 10% in year 2, and then grow another 10% over year 3 in year.
C. Clarence (C) believes we use a higher Discount Rate because of the risk of this type of project: 3
year project life, flat annual savings, 15% discount rate.
D. Delores (D) is convinced the machine will last longer than 3 years. He recommends using a 5 Year
Equipment Life: 5 year project and savings life, flat annual savings, 10% discount rate. In other
words, assume that the machine will last 2 more years and deliver 2 more years of savings.
Answer by ikleyn(52848)   (Show Source):
|
|
|
