A company is setting up a project to build housing units, and the investment volume is estimated at one million dollars to build 100 homes, and the price of the house is 20 thousand dollars, to be paid in unequal installments for 4 years, where the first installment is 40% of the price of the house, the second installment is 30%, the third installment is 20%, and the fourth installment is 10%. The

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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A company is setting up a project
to build housing units, and the
investment volume is estimated
at one million dollars to build 100
homes, and the price of the house
is 20 thousand dollars, to be paid
in unequal installments for 4
years, where the first installment
is 40% of the price of the house,
the second installment is 30%, the
third installment is 20%, and the
fourth installment is 10%. The
annual costs are 50 thousand
dollars. Calculate the simple rate
of return, the payback period
and the internal rate of return
for the project, knowing that the
lowest discount rate is 8% and the
highest is 12%. Will the project be
accepted or rejected?
Transcribed Image Text:A company is setting up a project to build housing units, and the investment volume is estimated at one million dollars to build 100 homes, and the price of the house is 20 thousand dollars, to be paid in unequal installments for 4 years, where the first installment is 40% of the price of the house, the second installment is 30%, the third installment is 20%, and the fourth installment is 10%. The annual costs are 50 thousand dollars. Calculate the simple rate of return, the payback period and the internal rate of return for the project, knowing that the lowest discount rate is 8% and the highest is 12%. Will the project be accepted or rejected?
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