Consider a project that costs $100,000 and yields a return of $30,000 for five years. At the end of the fifth year, there is a cost of $20,000 to dispose of the waste from the project. Should the project be undertaken if the discount rate is 0? 10 per- cent? 15 percent? The interest rate at which the net present discounted value of the project is zero is referred to as the internal rate of return of the project.

Consider a project that costs $100,000 and yields a return of $30,000 for five years. At the end of the fifth year, there is a cost of $20,000 to dispose of the waste from the project. Should the project be undertaken if the discount rate is 0? 10 per- cent? 15 percent? The interest rate at which the net present discounted value of the project is zero is referred to as the internal rate of return of the project.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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