a. compute the IRR of the Haven project. Use the intelligent "guess and check" method to identify an appropriate interpolation range (hish interest - low interest «= 3%). Be sure to document your choice of interest rates to try (like, why did you choose 5% next instead of 20%). Then use linear interpolation to approximate the IRR to one decimal place (XXX%).b. These projects are mutually exclusive (only one can be chosen). Which one do you recommend and why? Perform any additional calculations necessary. Investment costAnnual RevenuesAnnual expensesSalvage value after 20 yearsProject IRRLilo85,00018,0004,000TEMELLancelot78,00018,0007,75025,00012.2%Consider the following five investment alternatives. The company MARR is 15%.20,00015.8%Haven84,00025,00012,500Bella95,00035,000???29,5009,50010,00020.6%Judas70,00029,00014,00030,00021.2%Compute the IRR of the Haven project. Use the intelligent "guess and check" method to identify anappropriate interpolation range (high interest - low interest <= 3%). Be sure to document your choice ofinterest rates to try (like, why did you choose 5% next instead of 20%). Then use linear interpolation toapproximate the IRR to one decimal place (XX.X%).

The net present value of an asset or investment throughout its lifetime discounted to today's value.…

Answered: a. compute the IRR of the Haven…

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

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a. compute the IRR of the Haven project. Use the intelligent "guess and check" method to identify an appropriate interpolation range (hish interest - low interest «= 3%). Be sure to document your choice of interest rates to try (like, why did you choose 5% next instead of 20%). Then use linear interpolation to approximate the IRR to one decimal place (XXX%).

b. These projects are mutually exclusive (only one can be chosen). Which one do you recommend and why? Perform any additional calculations necessary.

Investment cost
Annual Revenues
Annual expenses
Salvage value after 20 years
Project IRR
Lilo
85,000
18,000
4,000
TEMEL
Lancelot
78,000
18,000
7,750
25,000
12.2%
Consider the following five investment alternatives. The company MARR is 15%.
20,000
15.8%
Haven
84,000
25,000
12,500
Bella
95,000
35,000
???
29,500
9,500
10,000
20.6%
Judas
70,000
29,000
14,000
30,000
21.2%
Compute the IRR of the Haven project. Use the intelligent "guess and check" method to identify an
appropriate interpolation range (high interest - low interest <= 3%). Be sure to document your choice of
interest rates to try (like, why did you choose 5% next instead of 20%). Then use linear interpolation to
approximate the IRR to one decimal place (XX.X%).

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