What is the aw for each of the three estimation conditions

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Reference no: EM131507099

Question: Suppose that, for a certain potential investment project, the optimistic, most likely, and pessimistic estimates are as shown in the accompanying table.

a. What is the AW for each of the three estimation conditions?

b. It is thought that the most critical factors are useful life and net annual cash flow. Develop a table showing the net AW for all combinations of the estimates for these two factors, assuming all other factors to be at their most likely values.

Most Optimistic Likely Pessimistic

Capital $90,000 $100,000 $120,000

investment Useful life 12 years 10 years 6 years

Market value $30,000 $20,000 $0

Net annual $35,000 $30,000 $20,000

cash flow MARR 10% 10% 10%
(per year)

Reference no: EM131507099

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