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(a) Get an IRR of 15% to the project. (b) Project to provide a 3-year payback. (a) D NDV ofEDVK S S 000 diggount noto f100/

(a) Get an IRR of 15% to the project. (b) Project to provide a 3-year payback. (a) D NDV ofEDVK S S 000 diggount noto f100/

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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3) ABC Inc. is negotiating with the mayor of Aarhus to start a water filtering initiative in an abandoned building. For the proposed initiative, the company has proposed the below cash flows to the Mayor (in DKKS). Assume that the mayor has agreed to subsidize the initiative as it may fit in the long term environmental policy of the city. How and when the subsidy will be paid, depends on which investment criterion is used by ABC Inc. In a discussion meeting, ABC Inc. has suggested that they would like to have a subsidy as per following alternatives: Year 0 Year 1 Year 2 Year 3 Year 4 Cash Flow -1,500,000 450,000 450,000 450,000 450,000 (a) Get an IRR of 15% to the project. (b) Project to provide a 3-year payback. (c) Provide an NPV of DKK 55,000 at a discount rate of 10%.
Transcribed Image Text:3) ABC Inc. is negotiating with the mayor of Aarhus to start a water filtering initiative in an abandoned building. For the proposed initiative, the company has proposed the below cash flows to the Mayor (in DKKS). Assume that the mayor has agreed to subsidize the initiative as it may fit in the long term environmental policy of the city. How and when the subsidy will be paid, depends on which investment criterion is used by ABC Inc. In a discussion meeting, ABC Inc. has suggested that they would like to have a subsidy as per following alternatives: Year 0 Year 1 Year 2 Year 3 Year 4 Cash Flow -1,500,000 450,000 450,000 450,000 450,000 (a) Get an IRR of 15% to the project. (b) Project to provide a 3-year payback. (c) Provide an NPV of DKK 55,000 at a discount rate of 10%.
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