Present Worth Method of Comparision¶

Example 4.1 Page 44¶

In [2]:
#initiation of variable
#technology 1
P=1200000.0;#in Rs
A=400000.0;#in Rs
i=20.0;#in % per annum
n=10.0;#in years

#calculation
PW=-P+A*(((1+i/100)**n)-1)/((i/100)*(1+i/100)**n);#in RS

#result
print "The present worth for this technology in RS.  ",round(PW,3);

#technology 2
P=2000000.0;#in Rs
A=600000.0;#in Rs
i=20.0;#in % per annum
n=10.0;#in years

#calculation
PW=-P+A*(((1+i/100)**n)-1)/((i/100)*(1+i/100)**n);#in RS

#result
print "The present worth for this technology in RS.  ",round(PW,3);

#technology 3
P=1800000.0;#in Rs
A=500000.0;#in Rs
i=20.0;#in % per annum
n=10.0;#in years

#calculation
PW=-P+A*(((1+i/100)**n)-1)/((i/100)*(1+i/100)**n);#in RS

#result
print "The present worth for this technology in RS.  ",round(PW,3);
print "It is clear from the calculations that the present worth of technology 2 is the highest among all technologies. Therefore technology 2 is suggested for implementation to expand the production.";

The present worth for this technology in RS.   476988.834
The present worth for this technology in RS.   515483.251
The present worth for this technology in RS.   296236.043
It is clear from the calculations that the present worth of technology 2 is the highest among all technologies. Therefore technology 2 is suggested for implementation to expand the production.


Example 4.2 Page 46¶

In [3]:
#initiation of variable
#bid 1
P=450000.0;#in Rs
A=27000.0;#in Rs
i=15.0;#in % per annum
n=15.0;#in years

#calculation
PW=P+A*(((1+i/100)**n)-1)/((i/100)*(1+i/100)**n);#in RS

#result
print "The present worth for this bid in RS. ",round(PW,3)

#bid 2
P=540000.0;#in Rs
A=28500.0;#in Rs
i=15.0;#in % per annum
n=15.0;#in years

#calculation
PW=P+A*(((1+i/100)**n)-1)/((i/100)*(1+i/100)**n);#in RS

#result
print "The present worth for this bid in RS. ",round(PW,3)
print "The total present worth cost of bid 1 is less than that of bid 2. Hence bid 1 is to be selected for implementation. That is, the Elevator from Alpha Elevator Inc. is to be purchased and installed in the new building.";

The present worth for this bid in RS.  607878.993
The present worth for this bid in RS.  706650.048
The total present worth cost of bid 1 is less than that of bid 2. Hence bid 1 is to be selected for implementation. That is, the Elevator from Alpha Elevator Inc. is to be purchased and installed in the new building.


Example 4.3 Page 47¶

In [4]:
#initiation of variable
#investment proposal A
P1=-10000.0;#in Rs
P2=3000.0;#in Rs
P3=3000.0;#in Rs
P4=7000.0;#in Rs
P5=6000.0;#in Rs
i=18.0;#in % per annum

#calculation
PW_A=P1+P2*1/((1+i/100)**1)+P3*1/((1+i/100)**2)+P4*1/((1+i/100)**3)+P5*1/((1+i/100)**4);#in RS

#result
print "The present worth of A in RS.  ",round(PW_A,3);

#investment proposal B
P1=-10000.0;#in Rs
P2=6000.0;#in Rs
P3=6000.0;#in Rs
P4=3000.0;#in Rs
P5=3000.0;#in Rs
i=18.0;#in % per annum

#calculation
PW_B=P1+P2*1/((1+i/100)**1)+P3*1/((1+i/100)**2)+P4*1/((1+i/100)**3)+P5*1/((1+i/100)**4);#in RS

#result
print "The present worth of B in RS.  ",round(PW_B,3);
print"At i=18%, the present worth of proposal B is higher than that of proposal A. Therefore, select proposal B."

The present worth of A in RS.   2052.076
The present worth of B in RS.   2767.112
At i=18%, the present worth of proposal B is higher than that of proposal A. Therefore, select proposal B.


Example 4.4 Page 48¶

In [5]:
#initiation of variable
P0=400000.0;#in Rs
P=200000.0;#in Rs
i=18.0;#in % per annum
n=10.0;#in years

#calcualtion
PW=P0+P*(((1+i/100)**n)-1)/((i/100)*(1+i/100)**n);#in RS

#result
print "The present worth of alternative 2 in RS. ",round(PW,3);
print "The present worth of 2nd alternative is less than that of first one i.e., complete downpayment of Rs. 1600000. Hence, select 2nd alternative.";

The present worth of alternative 2 in RS.  1298817.259
The present worth of 2nd alternative is less than that of first one i.e., complete downpayment of Rs. 1600000. Hence, select 2nd alternative.


Example 4.5 Page 49¶

In [8]:
#initiation of variable
#plan 1
P0=-1000.0;#in Rs
P=12000.0;#in Rs
i=12.0;#in % per annum
n=15.0;#in years

#calculation
PW1=P0+P*1/((1+i/100)**n);#in RS

#result
print "The present worth of Plan-1 in RS.  ",round(PW1,3);

#plan 2
P0=-1000.0;#in Rs
P=4000.0;#in Rs
i=12.0;#in % per annum
n1=10.0;#in years
n2=15.0;#in years

#calculation
PW2=P0+P*1/((1+i/100)**n1)++P*1/((1+i/100)**n2);#in RS

#result
print "The present worth of Plan-2 in RS.",round(PW2,3);
print "The present worth of Plan-1 is more than that of Plan-1. Therefore plan 1 is the best plan from the investors point of view.";

The present worth of Plan-1 in RS.   1192.355
The present worth of Plan-2 in RS. 1018.678
The present worth of Plan-1 is more than that of Plan-1. Therefore plan 1 is the best plan from the investors point of view.


Example 4.6,Page 50¶

In [12]:
#initiation of variable
#plan 1
P0=-10000.0;#in Rs
P=800000.0;#in Rs
i=12.0;#in % per annum
n=20.0;#in years

#calcualtion
PW1=P0*(((1+i/100)**n)-1)/((i/100)*(1+i/100)**n)+P*1/((1+i/100)**n);#in RS

#result
print "The present worth of Plan-1 in RS. ",round(PW1,3);

#plan 2
P0=-10000.0;#in Rs
P=1500000.0;#in Rs
i=12.0;#in % per annum
n1=20.0;#in years
n2=25.0;#in years

#calcualtion
PW2=P0*(((1+i/100)**n1)-1)/((i/100)*(1+i/100)**n1)+P*1/((1+i/100)**n2);#in RS

#result
print "The present worth of Plan-2 in RS. ",round(PW2,3);
print "The present worth of Innovative Investment Ltd. Plan is more than that of Novel Investment Ltd. Plan. Therefore Innovative Investment Ltd. Plan is the best plan from the investors point of view.";

The present worth of Plan-1 in RS.  8238.976
The present worth of Plan-2 in RS.  13540.524
The present worth of Innovative Investment Ltd. Plan is more than that of Novel Investment Ltd. Plan. Therefore Innovative Investment Ltd. Plan is the best plan from the investors point of view.


Example 4.7 Page 50¶

In [13]:
#initiation of variable
P=12000.0;#in Rs
A1=10000.0;#in Rs
G=1000.0;#in Rs
i=18.0;#in % per annum
n=10.0;#in years

#calculation
PW=-P+(A1+G*(((1+i/100)**n)-i*n/100-1)/(((i/100)*(1+i/100)**n)-i/100))*(((1+i/100)**n)-1)/((i/100)*(1+i/100)**n);#in RS

#result
print "The present worth of the small business in RS.  ",round(PW,3);

The present worth of the small business in RS.   47293.316