3.

27
P = −15 000 − 800(P/A, 0.5%, 24) + 20 000(P/F, 0.5%, 24)
+ 1000(P/A, 0.5%, 12) + 1200(P/A, 0.5%, 12)(P/F, 0.5%, 12)
− [200 + 20(A/G, 0.5%, 18)](P/A, 0.5%, 18)(P/F, 0.5%, 6)

= −15 000 − 800(22.558) + 20 000(0.88721) + 1000(11.616)

+ 1200(11.616)(0.94192) − [200 + 20(8.3198)](17.168)(0.97052)

= −15 000 − 18 046 + 17 744 + 11 616 + 13 130 − 6105 = 3339

The present worth of this investment is $3339. Yogajothi should buy the
house.

4.5
Project
A Æ to sell X division
B Æ to buy Barco
C Æ Get New Financing
D Æ Expand in US

Restrictions
C is B is D is D is Feasible ?
contingent on contingent on contingent on contingent on
A B C D B or D A or C B Not(A)
DN
1 o
2 o x No
3 o x No
4 o x No
5 o o
6 o o x No
7 o o x x No
8 o o
9 o o x No
10 o o x No
11 o o o
12 o o o x No
13 o o o x No
14 o o o
15 o o o o x No

Then we select the Alternatives: DN do nothing

1 A
5 AB
8 BC
11 ABC
14 BCD
4.7

(a) PW = −28 000 + 5000(P/A, 15%, 10) + 3000(P/F, 15%, 10)

= −28 000 + 5000(5.0188) + 3000(0.24718)
= −2164.46
The present worth of the project is about −$2164.

(b) AW = −28 000(A/P, 15%, 10) + 5000 + 3000(A/F, 15%, 10)

= −28 000(0.19925) + 5000 + 3000(0.04925)
= −431.25
Or using the result of part (a):
AW = PW(A/P, 15%, 10) = −2164.46(0.19925) = −431.27
The annual worth of the project is about −$431.

(c) FW = −28 000(F/P, 15%, 10) + 5000(F/A, 15%, 10) + 3000

= −28 000(4.0456) + 5000(20.304) + 3000
= −8756.8
Or using the result of part (a):
FW = PW(F/P, 15%, 10) = −2164.46(4.0456) = −8756.54
The future worth of the project in 10 years is about −$8757.