Question 4 150000 points Save Answer When using excel for co

Question 4 1.50000 points Save Answer When using excel for computation of engineering projects, which of the following statement is not correct? a. present worth (PW) PV(,N,A, [Fl,type) b. the present worth computed manually as F(P/Fi,N) can be equated in excel as PVi,N,[AJ,F,type) C. none d. in the formulato compute annuity amount, (PMT(i,NPF),type), type: 1 denotes end of period cash flows and type = 0 is beginning of period cash flows e. future worth (FW) - FV(i,N,A,IPW,type)

Solution

4.

Correct Answer:

D

The correct formula to calculate the annuity is PV(Rate, NPER, PMT).

6.

Correct Answer:

B

Working note:

R = 7%

Time n = 5 years

Annual worth of the investment = 1000/((1-1/1.07^5)/.07) = $243.89

Annual benefit by machine A = $300

So, B/C ratio for machine A = 300/243.89 = 1.23

Present value of the benefits for machine B = 400/1.07 + 350/1.07^2 + 300/1.07^3 + 250/1.07^4 + 200/1.07^5

Present value of the benefits for machine B = $1257.75

Hence,

Uniform annual benefits by machine B = 1257.75/((1-1/1.07^5)/.07) = $306.75

B/C ratio for the machine B = 306.75/243.89 = 1.26

Due to higher B/C ratio of 1.26, machine B will be selected.