Figure: Investment Projects Project F G H I J K L M Rate of return on investment 20% 18 16 14 12 10 8 6 Cost of investment $ 500 300 1,000 200 2,000 1,500 1,200 800 Use Table: Investment Projects. If the market interest rate is 17%, the amount of investment demanded is: $2,000.

Figure: Investment Projects Project F G H I J K L M Rate of return on investment 20% 18 16 14 12 10 8 6 Cost of investment $ 500 300 1,000 200 2,000 1,500 1,200 800 Use Table: Investment Projects. If the market interest rate is 17%, the amount of investment demanded is: $2,000.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A company is considering the purchase of new equipment for $93,000. The projected annual net cash flows are $36,600. The machine has a useful life of 3 years and no salvage value. Management of the company requires an 11% return on investment. What is the net present value of this machine assuming all cash flows occur at year-end? a. $31,000 b. $4,600 c. ($3,561) d. $35,600 e. $86,996
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