- #1
rayven1lk
- 3
- 0
1)Hey guys i really need some help on this project I'm doing...i hope there's someone who could help me out and i'd really appreciate it...even if its some kinda hint its still fine...i just need some ideas...here's the question:
In the spreadsheet for problem1.xls you will nd the specications for two projects.
This includes how much will be received or invested and at which time. Some of the
values are unknown, specically X; t1; t2; t3. Investigate what values for these variables
will make project 2 preferable to project 1. You may impose restrictions on your
variables to attain closed form solutions if you like. Assume money is earned at the
compound interest rate given in the spreadsheet.
Project 1 Investment Time
-10000 0
-10000 1
-5000 2
3000 4
5000 5
10000 6
30000 7
30000 15
Project 2 Investment Time
-13000 0
-18000 1
10000 2
X 4
27000 t1
21000 t2
6000 t3
Compound interest rate 0.1
2) Present Value of Project 1 = -10000-10000*1.001^(-1)-5000*1.001^(-2)+3000*1.001^(-4)+5000*1.001^(-5)+10000*1.001^(-6)+30000*1.001^(-7)+30000*1.001^(-15)
Present Value of Project 2 =-13000-18000*1.001^(-1)+10000*1.001^(-2)+X*1.001^(-4)+27000*1.001^(-t1)+21000*1.001^(-t2)+6000*1.001^(-t3)
3) I'm nopt sure how to advance from this point
In the spreadsheet for problem1.xls you will nd the specications for two projects.
This includes how much will be received or invested and at which time. Some of the
values are unknown, specically X; t1; t2; t3. Investigate what values for these variables
will make project 2 preferable to project 1. You may impose restrictions on your
variables to attain closed form solutions if you like. Assume money is earned at the
compound interest rate given in the spreadsheet.
Project 1 Investment Time
-10000 0
-10000 1
-5000 2
3000 4
5000 5
10000 6
30000 7
30000 15
Project 2 Investment Time
-13000 0
-18000 1
10000 2
X 4
27000 t1
21000 t2
6000 t3
Compound interest rate 0.1
2) Present Value of Project 1 = -10000-10000*1.001^(-1)-5000*1.001^(-2)+3000*1.001^(-4)+5000*1.001^(-5)+10000*1.001^(-6)+30000*1.001^(-7)+30000*1.001^(-15)
Present Value of Project 2 =-13000-18000*1.001^(-1)+10000*1.001^(-2)+X*1.001^(-4)+27000*1.001^(-t1)+21000*1.001^(-t2)+6000*1.001^(-t3)
3) I'm nopt sure how to advance from this point