Estimates for a construction project appear in the following table: Dear optimistic most likely pessimistic Cost ($) 60,000 80,000 120,000 Annual profit ($) 16,000 15,000 13,500 Useful life (years) 10 10 10 Residual value ($) 0 0 0 a)Calculate the weighted average for costs and benefits, assigning 4 times more weight to the most probable estimate. b. Calculate the average internal rate of return. c)Weighted Average of Cost d)Weighted Average of Annual Profits e)Average internal rate of return
Estimates for a construction project appear in the following table: Dear optimistic most likely pessimistic Cost ($) 60,000 80,000 120,000 Annual profit ($) 16,000 15,000 13,500 Useful life (years) 10 10 10 Residual value ($) 0 0 0 a)Calculate the weighted average for costs and benefits, assigning 4 times more weight to the most probable estimate. b. Calculate the average internal rate of return. c)Weighted Average of Cost d)Weighted Average of Annual Profits e)Average internal rate of return
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 19EB: Wallace Company is considering two projects. Their required rate of return is 10%. Which of the two...
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Estimates for a construction project appear in the following table: Dear optimistic most likely pessimistic Cost ($) 60,000 80,000 120,000 Annual profit ($) 16,000 15,000 13,500 Useful life (years) 10 10 10 Residual value ($) 0 0 0 a)Calculate the weighted average for costs and benefits, assigning 4 times more weight to the most probable estimate. b. Calculate the average internal rate of return . c)Weighted Average of Cost d)Weighted Average of Annual Profits e)Average internal rate of return
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