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A group of farmers in Inverness is considering building an irrigation system from a water supply in some nearby mountains. They want to build a concrete reservoir with a steel pipe system. The first cost would be $320,000 with (current) annual maintenance costs of $2100. They expect the irrigation system will bring them $34,100 per year in additional (current) revenues due to better crop production. Their real dollar MARR is 2 percent, and they anticipate inflation will have a 20-year life. be 3 percent per year. Assume the reservoir a. Using the current cash flows, find the current IRR on this project. Use linear interpolation with x, = 7% and x2 = 8% to find your answer. The current IRR of this project is percent. (Round the final answer to two decimal places as needed. Round all intermediate values to six decimal places as needed.)

A group of farmers in Inverness is considering building an irrigation system from a water supply in some nearby mountains. They want to build a concrete reservoir with a steel pipe system. The first cost would be $320,000 with (current) annual maintenance costs of $2100. They expect the irrigation system will bring them $34,100 per year in additional (current) revenues due to better crop production. Their real dollar MARR is 2 percent, and they anticipate inflation will have a 20-year life. be 3 percent per year. Assume the reservoir a. Using the current cash flows, find the current IRR on this project. Use linear interpolation with x, = 7% and x2 = 8% to find your answer. The current IRR of this project is percent. (Round the final answer to two decimal places as needed. Round all intermediate values to six decimal places as needed.)

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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A group of farmers in Inverness is considering building an irrigation system from a water supply in some nearby mountains. They want to build a concrete reservoir with a steel pipe system. The first cost would be $320,000 with (current) annual maintenance costs of $2100. They expect the irrigation system will bring them $34,100 per year in additional (current) revenues due to better crop production. Their real dollar MARR is 2 percent, and they anticipate inflation to be 3 percent per year. Assume the reservoir will have a 20-year life. a. Using the current cash flows, find the current IRR on this project. Use linear interpolation with x, = 7% and x, = 8% to find your answer. The current IRR of this project is percent. (Round the final answer to two decimal places as needed. Round all intermediate values to six decimal places as needed.)
Transcribed Image Text:A group of farmers in Inverness is considering building an irrigation system from a water supply in some nearby mountains. They want to build a concrete reservoir with a steel pipe system. The first cost would be $320,000 with (current) annual maintenance costs of $2100. They expect the irrigation system will bring them $34,100 per year in additional (current) revenues due to better crop production. Their real dollar MARR is 2 percent, and they anticipate inflation to be 3 percent per year. Assume the reservoir will have a 20-year life. a. Using the current cash flows, find the current IRR on this project. Use linear interpolation with x, = 7% and x, = 8% to find your answer. The current IRR of this project is percent. (Round the final answer to two decimal places as needed. Round all intermediate values to six decimal places as needed.)
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