HW6_Nadia_khan_929

Year Cash Flow 0 -650000 1 225000 2 225000 3 225000 4 225000 5 225000 6 225000 7 225000 8 225000 9 225000 10 295000 IRR 32.79% Problem 7.7 If a manufacturer of electronic devices invests $650,000 in equipment for making compact pie purpose vibration measurement, estimate the rate of return from revenue of $225,000 per ye value from the used equipment sale in year 10. Solve with spreadsheet functions. Enter the IRR from the spreadsheet function, without a % sign (For example, for an IRR of 15.5

ezoelectric accelerometers for general ear for 10 years and $70,000 in salvage 5%, enter 15.5 into the answer field)

Cash Flow -4000 0 -300 -300 -300 -300 -100 -100 11900 11.67%

Year Cash Flow 0 -130000 1 29000 2 30000 3 31000 4 32000 5 33000 6 34000 7 35000 8 59000 IRR 19.17% Problem 7.17 Barron Chemical uses a thermoplastic polymer to enhance the appearance of certain RV panels. Th $130,000 with annual costs of $49,000 and revenues of $78,000 in year 1, increasing by $1000 per was realized when the process was discontinued after 8 years. What rate of return did the company trial and error or verify i* by spreadsheet. Enter IRR into Carmen without the % sign, xx.x

A 10000 PV 90000 i = A/PV 11.11% Problem 7.19 Aloma, a university graduate who started a successful business, wants to start an endowment in her n provide scholarships to IE students. She wants the scholarship to provide $10,000 per year and expec awarded on the day she fulfills the endowment obligation. If Aloma plans to donate $100,000, what r the university realize in order to award the $10,000 per year scholarship forever? Enter the IRR without the % sign, xx.x

name that will cts the first one to be rate of return must

of $10,000 aser holds

Year Cash Flow 0 -9250 1 0 2 0 3 0 4 0 5 0 6 0 7 0 8 0 9 0 10 0 11 0 12 0 13 0 14 0 15 0 16 0 17 0 18 50000 Rate 9.83% Problem 7.47 An engineer planning for his child’s college education purchased a zero-coupon corporate bond (i. bond that has no dividend payments) for $9250. The bond has a face value of $50,000 and is due years. If the bond is held to maturity, determine the i* for the investment. Enter the IRR without the % sign, xx.x

FV 10000 i 0.08 PV -9200 n 7 a) ROR 3 months 2.40% b) ROR per year 9.58% Problem 7.51 A $10,000 mortgage bond with a bond interest rate of 8% per year, payable quarterly, was purc The bond was kept until it was due, a total of 7 years. What rate of return was made by the pur (a) per 3 months? (b) per year (nominal)?

chased for $9200. rchaser:

mpany principals. The two fe-cycle costs, the AOC of the ars are estimated to be 50% of wo vehicles? (b) Provided the

i a) b) Year P Q Q-P Year P 0 -18000 -35000 -17000 0 -18000 1 -4000 -3600 400 1 -4000 2 -4000 -3600 400 2 -4000 3 -21000 -3600 17400 3 -3000 4 -4000 -3600 400 4 5 -4000 -3600 400 5 6 -3000 -900 2100 6 NPV ($47,628.92) ($49,154.86) NPV ($27,196.09) AW ($10,935.95) ($11,286.32) AW ($10,935.95) FV ($84,377.54) ($87,080.83) IRR 6.84% Problem 8.25 A solid-waste recycling plant is considering two types of storage bins using an MARR of 10% per year. (a) Use ROR evaluation to determine which should be selected. (b) Confirm the selection using the regular AW method at MARR = 10% per year.

n 8 Year A B C D D-C i 0.11 0 -30000 -36000 -41000 -53000 -12000 1 4000 5000 8000 10500 2500 Defender Challenger 2 4000 5000 8000 10500 2500 DN A 3 4000 5000 8000 10500 2500 DN B 4 4000 5000 8000 10500 2500 DN C 5 4000 5000 8000 10500 2500 C D 6 4000 5000 8000 10500 2500 7 4000 5000 8000 10500 2500 8 5000 7000 8500 8500 0 IRR 2.12% 3.43% 11.26% 11.09% 10.43% Problem 8.31 A metal plating company is considering four different methods for recovering by-product heavy metals from a manufacturing site’s liquid waste. The investment costs and annual net incomes associated with each method have been estimated. All methods have an 8-year life; the MARR is 11% per year; and an AW-based ROR analysis is required. (a) If the methods are independent (because they can be implemented at different plants), which ones are acceptable? (b) If the methods are mutually exclusive, determine which one should be selected.