A firm has available the following set of investment options. Additionally, the firm can always lend money to other firms, thereby receiving a return of 6%. Or they can borrow up to $100,000 at a rate of 10%. What should the firm's MARR be if they had a budget for projects of $40,000? Project 1 23 LO CO 4 5 6 Invesment Rate of Return $10,000 20% $10,000 15% $10,000 10% $10,000 8% $10,000 7% $10.000 4%

A firm has available the following set of investment options. Additionally, the firm can always lend money to other firms, thereby receiving a return of 6%. Or they can borrow up to $100,000 at a rate of 10%. What should the firm's MARR be if they had a budget for projects of $40,000? Project 1 23 LO CO 4 5 6 Invesment Rate of Return $10,000 20% $10,000 15% $10,000 10% $10,000 8% $10,000 7% $10.000 4%

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

The holding cost at a retailer is 35 percent per year. The retailer's annual inventory turns equal three. How much does it cost the retailer to hold a dress that is purchased for $50? O $22.27 O $8.75 $5.83 $17.50
You deposit $700 in your savings account for a year. By the end of the year, the value of your deposit increases to $730. What interest rate is your bank paying on the savings account? Choose one: O A. 0.04% B. 0.23% C. -4.11% D. 4.29%
Question 4 Part C: You have decided to invest in a project to build and run a production line for a friend. Your friend has specified that the production line needs to last forever, and will always be operational. The associated costs for the project are shown in the table below. How much should you charge your friend now for the production line in order to build and maintain the perpetual project? Interest rate is 6%. Costs Initial Cost Annual Operating & Maintenance Costs Year incurred Year O Major Maintenance Costs Amount $175,000 $10,000 $80,000 Question 4 Part C: What is the equation used to find the portion of the cost due to the Annual Cost (annual operating and maintenance costs)? Per year, forever First in year 5, then every 5 years forever P = 10,000/0.06 OP=10,000/0.06 +80,000(P/A, 0.06, 5) OP=10,000(P/F, 0.06, 1) + 80,000(P/A, 0.06, 10)
The current yield on a 7.000 TL, 7% coupon bond selling for 5.000 TL is ____ a. 9,80% b. 5% c. 7% d. 40%
3. Consider an individual whose income stream is (200,120) in a situation where he is faced with the choice of 3 economically independent projects, alpha, beta and gamma. The market interest rate is 50%. The cash flows for the three projects are as follows: Project Co C₁ Alpha Beta -20 24 Gamma 10 -12 a) Which projects (if any) would the individual invest in? b) How much would he end up consuming in time 0? c) How much would he end up consuming in time 1? d) Show that the individual is better off with the investments than if he just consumed according to his income pattern. -12 30
Which of the following describes the steepest investment schedule? O a. 1=450-8(3) O b. 1=450-2(3) O c. 1=450-9(3) O d. 1-450-5(3)
pls help me answer this asap
5. Rearden Metals is considering opening a strip mining operation to provide some of the raw materials needed in producing Rearden metal. The initial purchase of the land and the as- sociated costs of opening up mining operations will cost $100 million today. The mine is expected to generate $30 million worth of ore per year for the next 10 years. In 11 years, when the project is over, Rearden will need to spend $200 million to restore the land to its original pristine natural appearance. Which of the following is FALSE? A) Rearden should only use the NPV rule in this case to determine whether to make this investment. B) Rearden could use either the NPV rule or the IRR rule in this case, and will get the same answer regardless of the cost of capital. C) In this case, the NPV will not necessarily be decreasing in the cost of capital or discount rate used. D) Rearden should not use the payback rule in this example because it is likely to be mis- leading. E) Rearden could make a mistake…
A stock currently sells for 13 TL per share and pays 0.18 TL per year in dividends. What is an investor's valuation of this stock if she expects it to be selling for 16 TL in onelyear and requires a 10 % return on equity investments? O a. 14,55% O b. 11.82% Oc 14,71% O d. 14,73%
If MTR = 0.2; MPS = 0.2 what is the value of the MLR? O a. 0.8 O b. 0.5 OC. 0.04 O d. 0.4
The YTM on Apple bond is 3%. The tax rate is 21%. What is the after-tax cost of debt? Select one: a. 2.50 O b. 3% С. 2.37% O d. 2.75%
If you want to withdraw $5000 in each year for the next 10 years when the interest rate is 40%, what is the approximate amount you need to invest now? O a. $11000 O b. $13000 O . $8500 O d. $16000