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
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Author:WINSTON, Wayne L.
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Chapter2: Introduction To Spreadsheet Modeling
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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.
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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