Assume an MARR of 4.0%. Note: All values shown are in 1000's, thus -80 represents -80,000. Compute the IRR, ERR and DBPB for the investment outlined in the following cash flow table: 3. Year 1 3 4 8. 9. Revenue +1350 +1300 +1250 +1200 +1350 +1300 +1250 +1200 +1150 O&M Costs -80 -80 -80 -80 -80 -80 -80 -80 -80 Capital Costs or -8000 -400 +25 Other Major Costs
Assume an MARR of 4.0%. Note: All values shown are in 1000's, thus -80 represents -80,000. Compute the IRR, ERR and DBPB for the investment outlined in the following cash flow table: 3. Year 1 3 4 8. 9. Revenue +1350 +1300 +1250 +1200 +1350 +1300 +1250 +1200 +1150 O&M Costs -80 -80 -80 -80 -80 -80 -80 -80 -80 Capital Costs or -8000 -400 +25 Other Major Costs
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Transcribed Image Text:3. Assume an MARR of 4.0%. Note: All values shown are in 1000’s, thus -80 represents -80,000. Compute the IRR, ERR and DBPB for the investment outlined in the following cash flow table:
| Year | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 |
|------|-------|-------|-------|-------|-------|-------|-------|-------|-------|-------|
| Revenue | +1350 | +1300 | +1250 | +1200 | +1350 | +1300 | +1250 | +1200 | +1150 |
| O&M Costs | -80 | -80 | -80 | -80 | -80 | -80 | -80 | -80 | -80 |
| Capital Costs or Other Major Costs | -8000 | | | | -400 | | | | | +25 |
This table represents revenue and costs over a span of 10 years, with initial major costs in year 0 and some additional costs in year 4, and recovery in year 9. Calculations are required to determine the Internal Rate of Return (IRR), External Rate of Return (ERR), and Discounted Payback Period (DBPB) for the investment.
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