An engineering project analyst is contemplating a 3-year project which will require an initial investment for equipment of $85,000. It is anticipated that, if there is no inflation, annual revent from the project will be $60,000 and annual cash expenses will be $25,000. It is estimated that the left-over equipment will have a market value of $45,000 at the end of three years. MARR 10%. a. What is the Present equivalent value of the project's cash outflow? b. What is the project cash inflows' equivalent future worth? c. Determine the ERR of the project. (Enter answer with 2 decimal places)

An engineering project analyst is contemplating a 3-year project which will require an initial investment for equipment of $85,000. It is anticipated that, if there is no inflation, annual revent from the project will be $60,000 and annual cash expenses will be $25,000. It is estimated that the left-over equipment will have a market value of $45,000 at the end of three years. MARR 10%. a. What is the Present equivalent value of the project's cash outflow? b. What is the project cash inflows' equivalent future worth? c. Determine the ERR of the project. (Enter answer with 2 decimal places)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

An engineering project analyst is contemplating a 3-year project which will require an initial investment for equipment of $85,000. It is anticipated that, if there is no inflation, annual revenues
from the project will be $60,000 and annual cash expenses will be $25,000. It is estimated that the left-over equipment will have a market value of $45,000 at the end of three years. MARR is
10%.
a. What is the Present equivalent value of the project's cash outflow?
b. What is the project cash inflows' equivalent future worth?
c. Determine the ERR of the project.
(Enter answer with 2 decimal places)

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