Exclusive Choice Pop Quiz

Given the following assets, which asset would you choose if the MARR is 12%

 Asset A Asset B Asset C Asset D Year 0 -10 -15 -5 -100 Year 1 15 0 10 0 Year 2 0 20 0 111
(1)
\begin{align} PW(A) = -10 + {15 \over 1.12} \end{align}

PW(A) = 3.39 (2) \begin{align} PW(B) = -15 + {20 \over 1.12^2} \end{align} PW(B) =0.94

(3)
\begin{align} PW(C) = -5 + {10 \over 1.12} \end{align}

PW(C) = 3.93 (4) \begin{align} PW(D) = -100 + {111 \over 1.12^2} \end{align} PW(D)=-11.51

The correct answer is Asset C since C has the largest present worth.

page revision: 3, last edited: 20 Nov 2009 03:33