solving an economics question.
I’m trying to study for my Economics course and I need some help to understand this question.
/0x4*
Investor group offered three proposals
- To invest $3,500,000 on this product with annual O&M of $62,000 starting end of year one. The proposal is expected to result in annual benefit in cash flow of $920,000 over na years period with interest rate of 12.5 %.
- To invest $2,700,000 on this product with annual O&M of $83,000 starting end of year one. The proposal is expected to result in annual benefit in cash flow of $830,000 over nb years period with interest rate of 11 %.
- To invest $1,900,000 on this product with annual O&M of $91,000 starting end of year one. The proposal is expected to result in benefit in cash flow of $220,000 first year, which increases by $60,000 yearly over nc years period with interest rate of 14 %.
Which proposal you should accept, using the present worth analysis?
