An engineering company establish a new agreement with a car company to conduct design and test activities. The net cash flow of last three years is shown in the following table. According to this, determine the maximum number of ROR of this cash flow. If MARR is 42%, is it appropriate to use ROR analysis to make decisions about this agreement? On the other hand, if MARR is %20, what can we say about the appropriateness of the ROR analysis? Period Cash Flows 0 +2000 1 -500 2 -8100 3 6800

An engineering company establish a new agreement with a car company to conduct design and test activities. The net cash flow of last three years is shown in the following table. According to this, determine the maximum number of ROR of this cash flow. If MARR is 42%, is it appropriate to use ROR analysis to make decisions about this agreement? On the other hand, if MARR is %20, what can we say about the appropriateness of the ROR analysis? Period Cash Flows 0 +2000 1 -500 2 -8100 3 6800

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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