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a. What is the real internal rate of return? (This is most easily done with a spreadsheet.) percent. The real internal rate of return is about (Round to one decimal place as needed.) b. What inflation rate will make the real MARR equal to the real internal rate of return? The inflation rate would need to be about (Round to two decimal places as needed.) percent. c. Calculate the present worth of the project under three possible future inflation rates. Assume the inflation rate will be 1 percent, 2 percent, or 3 percent per year. With an inflation rate of 1 percent, the present worth of the project would be $ . With an inflation rate of 2 percent, the present worth of the project would be $ the present worth of the project would be $ (Round to the nearest integer as needed.) With an inflation rate of 3 percent,

a. What is the real internal rate of return? (This is most easily done with a spreadsheet.) percent. The real internal rate of return is about (Round to one decimal place as needed.) b. What inflation rate will make the real MARR equal to the real internal rate of return? The inflation rate would need to be about (Round to two decimal places as needed.) percent. c. Calculate the present worth of the project under three possible future inflation rates. Assume the inflation rate will be 1 percent, 2 percent, or 3 percent per year. With an inflation rate of 1 percent, the present worth of the project would be $ . With an inflation rate of 2 percent, the present worth of the project would be $ the present worth of the project would be $ (Round to the nearest integer as needed.) With an inflation rate of 3 percent,

Advanced Engineering Mathematics
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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Lifewear, a manufacturer of women's sports clothes, is considering adding a line of skirts and jackets. The production would take place in a part of its factory that is currently not being used. The first output would be available in time for the 2021 fall season. The following information is available. Answer parts (a) through (d). The inflation rate would need to be about (Round to two decimal places as needed.) New Product Line Information First cost in 2020 ($) Planned output (units/year) Observed, current dollar MARR before tax Study period Materials Labour Output a. What is the real internal rate of return? (This is most easily done with a spreadsheet.) percent. The real internal rate of return is about (Round to one decimal place as needed.) b. What inflation rate will make the real MARR equal to the real internal rate of return? percent. Based on the answers from parts (a), (b), and (c), the firm inflation rates are Year 2020 Prices ($/unit) 15,200,000 322,000 0.25 6 years c. Calculate the present worth of the project under three possible future inflation rates. Assume the inflation rate will be 1 percent, 2 percent, or 3 percent per year. With an inflation rate of 1 percent, the present worth of the project would be $ With an inflation rate of 2 percent, the present worth of the project would be $ the present worth of the project would be $ (Round to the nearest integer as needed.) d. Decide if Lifewear should add this new line of skirts and jackets. Explain your answer. accept the project since the project 12 7.25 34 With an inflation rate of 3 percent, profitable at inflation rates below the inflation rate found in part (b) where said
Transcribed Image Text:Lifewear, a manufacturer of women's sports clothes, is considering adding a line of skirts and jackets. The production would take place in a part of its factory that is currently not being used. The first output would be available in time for the 2021 fall season. The following information is available. Answer parts (a) through (d). The inflation rate would need to be about (Round to two decimal places as needed.) New Product Line Information First cost in 2020 ($) Planned output (units/year) Observed, current dollar MARR before tax Study period Materials Labour Output a. What is the real internal rate of return? (This is most easily done with a spreadsheet.) percent. The real internal rate of return is about (Round to one decimal place as needed.) b. What inflation rate will make the real MARR equal to the real internal rate of return? percent. Based on the answers from parts (a), (b), and (c), the firm inflation rates are Year 2020 Prices ($/unit) 15,200,000 322,000 0.25 6 years c. Calculate the present worth of the project under three possible future inflation rates. Assume the inflation rate will be 1 percent, 2 percent, or 3 percent per year. With an inflation rate of 1 percent, the present worth of the project would be $ With an inflation rate of 2 percent, the present worth of the project would be $ the present worth of the project would be $ (Round to the nearest integer as needed.) d. Decide if Lifewear should add this new line of skirts and jackets. Explain your answer. accept the project since the project 12 7.25 34 With an inflation rate of 3 percent, profitable at inflation rates below the inflation rate found in part (b) where said
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