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For Nos. 48-50. A special purpose machine is to be acquired by paying a P15.000 initial cash payment plus a debt assumption of P135.000. The machine will generate additional net annual cash inflow of P40.000 for the firm throughout the 10 years of useful life of the asset. At the end of its life, a salvage value of 10% of its initial cost will be realized. Assuming that the MARR is 20% per annum, 48. Is the project justified using the IRR method? A. IRR = 0.1572: Since IRR MARR, project is not justified. B. IRR = 0.1984; Since IRR < MARR, project is not justified. C. IRR = 0.2379: Since IRR > MARR, project is justified. D. IRR = 0.2762: Since IRR > MARR, project is justified.

For Nos. 48-50. A special purpose machine is to be acquired by paying a P15.000 initial cash payment plus a debt assumption of P135.000. The machine will generate additional net annual cash inflow of P40.000 for the firm throughout the 10 years of useful life of the asset. At the end of its life, a salvage value of 10% of its initial cost will be realized. Assuming that the MARR is 20% per annum, 48. Is the project justified using the IRR method? A. IRR = 0.1572: Since IRR MARR, project is not justified. B. IRR = 0.1984; Since IRR < MARR, project is not justified. C. IRR = 0.2379: Since IRR > MARR, project is justified. D. IRR = 0.2762: Since IRR > MARR, project is justified.

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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For Nos. 48-50. A special purpose machine is to be acquired by paying a P15,000 initial cash payment plus a debt assumption of P135,000. The machine will generate additional net annual cash inflow of P40,000 for the firm throughout the 10 years of useful life of the asset. At the end of its life, a salvage value of 10% of its initial cost will be realized. Assuming that the MARR is 20% per annum, 48. Is the project justified using the IRR method? A. IRR = 0.1572: Since IRR B. IRR = 0.1984; Since IRR MARR, project is not justified. MARR, project is not justified. C. IRR = 0.2379: Since IRR > MARR, project is justified. D. IRR = 0.2762; Since IRR > MARR, project is justified. 49. Is the project justified using the ERRR method? A. ERRR = 0.2653; Since ERRR > MARR, project is justified. B. ERRR = 0.2320; Since ERRR > MARR, project is justified. C. ERRR = 0.1987; Since ERRR MARR, project is not justified. D. ERRR = 0.1653; Since ERRR < MARR, project is not justified. 50. Is the project justified using the ERR method? A. ERR = 0.1813; Since ERR B. ERR = 0.1974; Since ERR MARR, project is not justified. MARR, project is not justified. C. ERR = 0.2152; Since ERR > MARR, project is justified. D. ERR = 0.2278; Since ERR > MARR, project is justified.
Transcribed Image Text:For Nos. 48-50. A special purpose machine is to be acquired by paying a P15,000 initial cash payment plus a debt assumption of P135,000. The machine will generate additional net annual cash inflow of P40,000 for the firm throughout the 10 years of useful life of the asset. At the end of its life, a salvage value of 10% of its initial cost will be realized. Assuming that the MARR is 20% per annum, 48. Is the project justified using the IRR method? A. IRR = 0.1572: Since IRR B. IRR = 0.1984; Since IRR MARR, project is not justified. MARR, project is not justified. C. IRR = 0.2379: Since IRR > MARR, project is justified. D. IRR = 0.2762; Since IRR > MARR, project is justified. 49. Is the project justified using the ERRR method? A. ERRR = 0.2653; Since ERRR > MARR, project is justified. B. ERRR = 0.2320; Since ERRR > MARR, project is justified. C. ERRR = 0.1987; Since ERRR MARR, project is not justified. D. ERRR = 0.1653; Since ERRR < MARR, project is not justified. 50. Is the project justified using the ERR method? A. ERR = 0.1813; Since ERR B. ERR = 0.1974; Since ERR MARR, project is not justified. MARR, project is not justified. C. ERR = 0.2152; Since ERR > MARR, project is justified. D. ERR = 0.2278; Since ERR > MARR, project is justified.
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