CASE STUDY: HOW A NEW ENGINEERING GRADUATE CAN HELP HIS FATHER
 FIGURE 1.png)
 figure 2.png)
1. Cash flows for each option are summarized at top of the spreadsheet. Rows 9-19 show annual
estimates for options in increasing order of initial investment: 3, 2, 1, 4, 5.
 ANSWER.png)
2. Multiple i* values: Only for option #2; there are 3 sign changes in cash flow and cumulative cash flow series. No values other than 10.1% are found in the 0 to 100% range.
3. Do incremental ROR analysis after removing #1 and #2. See row 22. 4-to-3 comparison
yields 49.9%, 5-to-4 has no return because all incremental cash flows are 0 or
negative. PW at 25% is $785 for #4, which is the largest PW. Aw is also the largest for #4.
Conclusion: Select option #4 – trade-out with friend.
4. PW vs. i charts for all 5 options are on the spreadsheet.
 FIGURE 4.png)
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