Avian Air Cargo is considering an investment of $10,000,000 with life expectancy of 10 years and annual operating cost of $400,000 in Year) $50,000 per year starting in Year 2 through the life of the project. Avian Air Cargo anticipates a revenue streame $2.500,000 per year for 12%, what is the rate of return for this project and is it economically justified? It is NOT economically justified because the rate of return is between 14% and 15%. It IS economically justified because the rate of return is between 10% and 11%. It is NOT economically justified because the rate of return is between 10% and 11%. It IS economically justified because the rate of return is between 14% and 15% ance of MARRE
Avian Air Cargo is considering an investment of $10,000,000 with life expectancy of 10 years and annual operating cost of $400,000 in Year) $50,000 per year starting in Year 2 through the life of the project. Avian Air Cargo anticipates a revenue streame $2.500,000 per year for 12%, what is the rate of return for this project and is it economically justified? It is NOT economically justified because the rate of return is between 14% and 15%. It IS economically justified because the rate of return is between 10% and 11%. It is NOT economically justified because the rate of return is between 10% and 11%. It IS economically justified because the rate of return is between 14% and 15% ance of MARRE
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Avian Air Cargo is considering an investment of $10,000,000 with life expectancy of 10 years and annual operating cost of $400,000 in Year 1 with an
$50,000 per year starting in Year 2 through the life of the project. Avian Air Cargo anticipates a revenue stream of $2,500,000 per year for 20 years I
12%, what is the rate of return for this project and is it economically justified?
It is NOT economically justified because the rate of return is between 14% and 15%.
It IS economically justified because the rate of return is between 10% and 11%.
It is NOT economically justified because the rate of return is between 10% and 11%.
It IS economically justified because the rate of return is between 14% and 15%
of
MARR
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