Assets
. A B C D E
LIFE 6 12 2 3 4
PW(10%) 5 9 1 -2 3
AW(10%) 2 2 1 -1.2 3
IRR 9% 14% 20% 13% 12%

(1) Which assets would you buy?

ANSWER
Since you can buy as many assets as you want (unconstrained choice)
Buy B, C and E because IRR>=MARR and the PW>=0

(2) Which asset would you buy? (no service required)

ANSWER
Since you can only buy one asset (exclusive choice)
Buy B because out of the three assets (B, C and E) E had the higher PW.

(3) Which asset would you buy if you had to provide 10 years of service?

ANSWER
Since you can only buy one asset (exclusive choice)
Buy E because it has the highest AW.

(4) Which asset(s) is a loan?

ANSWER
B is a loan because the PW is less than zero. If the PW<0 and IRR<MARR, then it is a loan.

(5) Which asset would you choose if MARR = 21%

ANSWER
Since you can only buy one asset (exclusive choice)
Buy D because D is a loan and you are to buy a loan when MARR>IRR

(6) Which assets would you buy if the IRR = 21% for all of the assets.

ANSWER
Since you can buy as many assets as you want (unconstrained choice)
Buy A, B, C, and E because the IRR>=21% and the PW>=0 for those assets. Do not buy D because the PW<0

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