6-31. Compare two renewable energy projects using PWand FW methods at a 7% interest rate: Project A costs$250,000 with $65,000 returns annually for six years, andProject B costs $220,000 with $60,000 returns annually forseven years. (6.5)

To compare two renewable energy projects, we applied both the Present Worth (PW) and Future Worth…

Answered: 6-31. Compare two renewable energy…

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 6E

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A firm has the opportunity to invest in a project having an initial outlay of $20,000. Net cash inflows (before depreciation and taxes) are expected to be $5,000 per year for five years. The firm uses the straight-line depreciation method with a zero salvage value and has a (marginal) income tax rate of 40 percent. The firms cost of capital is 12 percent. Compute the IRR and the NPV. Should the firm accept or reject the project?
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Metropolitan Hospital has estimated its average monthly bed needs as N=1,000+9X where X=timeperiod(months);January2002=0 N=monthlybedneeds Assume that no new hospital additions are expected in the area in the foreseeable future. The following monthly seasonal adjustment factors have been estimated, using data from the past five years: Forecast Metropolitans bed demand for January, April, July, November, and December 2007. If the following actual and forecast values for June bed demands have been recorded, what seasonal adjustment factor would you recommend be used in making future June forecasts?

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6-31. Compare two renewable energy projects using PW and FW methods at a 7% interest rate: Project A costs $250,000 with $65,000 returns annually for six years, and Project B costs $220,000 with $60,000 returns annually for seven years. (6.5)