1. A bakery is considering investing in a new oven. The oven has a cost of $14,000 and is expected to generate additional profits of $2,000 per year over its 10-year lifespan. At the end of 10 years, the oven will have no salvage value. Within what range of interest rates does the Internal Rate of Return (IRR) for this investment fall? Circle your answer and show your work. You do not have to solve for the exact interest rate. 1% 5 6 78 9 10 11 a) Less than 6% b) 6% to 8% c) 8% to 10% d) Greater than 10% (P/A, 1%, 10) 7.72 7.36 7.02 6.71 6.42 6.14 5.89

1. A bakery is considering investing in a new oven. The oven has a cost of $14,000 and is expected to generate additional profits of $2,000 per year over its 10-year lifespan. At the end of 10 years, the oven will have no salvage value. Within what range of interest rates does the Internal Rate of Return (IRR) for this investment fall? Circle your answer and show your work. You do not have to solve for the exact interest rate. 1% 5 6 78 9 10 11 a) Less than 6% b) 6% to 8% c) 8% to 10% d) Greater than 10% (P/A, 1%, 10) 7.72 7.36 7.02 6.71 6.42 6.14 5.89

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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