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Assume that MARR = 12% in the following questions. a. Classify each project as either a pure or a mixed investment. b. Compute the true IRR for each investment. c. Compute the MIRR for each project at MARR = 12%. d. Determine the acceptability of each project.

Assume that MARR = 12% in the following questions. a. Classify each project as either a pure or a mixed investment. b. Compute the true IRR for each investment. c. Compute the MIRR for each project at MARR = 12%. d. Determine the acceptability of each project.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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**7.23 Consider the investment projects given in Table P7.23.** ### Table P7.23 #### Net Cash Flow | \( n \) | A | B | C | D | E | |---------|------|-------|----|------|-------| | 0 | \(-1,000\) | \(-5,000\) | \(-2,000\) | \(-2,000\) | \(-1,000\) | | 1 | 3,100 | 20,000 | 1,560 | 2,800 | 3,600 | | 2 | \(-2,200\) | 12,000 | 944 | \(-200\) | \(-5,700\) | | 3 | — | \(-3,000\) | — | — | 3,600 | #### Internal Rate of Return (IRR) | | i* | |--------|------------------------------------------| | A | \( (10\%, 100\%) \) | | B | \(-80.80\%\) | | C | 18\% | | D | \(-92.45\%, 32.45\%\) | | E | 35.39\% | ### Instructions Assume that Minimum Attractive Rate of Return (MARR) = 12% in the following questions. a. Classify each project as either a pure or a mixed investment. b. Compute the true IRR for each investment. c. Compute the Modified Internal Rate of Return (MIRR) for each project at MARR = 12%. d. Determine the acceptability of each project.
Transcribed Image Text:**7.23 Consider the investment projects given in Table P7.23.** ### Table P7.23 #### Net Cash Flow | \( n \) | A | B | C | D | E | |---------|------|-------|----|------|-------| | 0 | \(-1,000\) | \(-5,000\) | \(-2,000\) | \(-2,000\) | \(-1,000\) | | 1 | 3,100 | 20,000 | 1,560 | 2,800 | 3,600 | | 2 | \(-2,200\) | 12,000 | 944 | \(-200\) | \(-5,700\) | | 3 | — | \(-3,000\) | — | — | 3,600 | #### Internal Rate of Return (IRR) | | i* | |--------|------------------------------------------| | A | \( (10\%, 100\%) \) | | B | \(-80.80\%\) | | C | 18\% | | D | \(-92.45\%, 32.45\%\) | | E | 35.39\% | ### Instructions Assume that Minimum Attractive Rate of Return (MARR) = 12% in the following questions. a. Classify each project as either a pure or a mixed investment. b. Compute the true IRR for each investment. c. Compute the Modified Internal Rate of Return (MIRR) for each project at MARR = 12%. d. Determine the acceptability of each project.
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