A public-private initiative in Texas will significantly expand the wind-generated energy through-out the state. The cash flow for one phase of the project involving Central Point Energy, a trans-mission utility company, is shown. Given reinvestment rate of 14% per year for excess funds and10 % per year for borrowing rate for extra funds, determine: given MARR = 12%YearNet cash flow0.-500001+22000+380003.-20004-1000+5000a) How many number of ROR values is expected and why?b) Calculate the external rate of return (MIRR).c) Is the project economically viable?

a) The number of ROR values expected is 3 because there are 3 sign changes in the Net cash flow .…

Ihitiative in Texas will significantly expand the wind-generated ivate out the state. The cash flow for one phase of the project involving Central Point E mission utility company, is shown. Given reinvestment rate of 14% per year for e 10.0/

Ihitiative in Texas will significantly expand the wind-generated ivate out the state. The cash flow for one phase of the project involving Central Point E mission utility company, is shown. Given reinvestment rate of 14% per year for e 10.0/

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

A public-private initiative in Texas will significantly expand the wind-generated energy through-
out the state. The cash flow for one phase of the project involving Central Point Energy, a trans-
mission utility company, is shown. Given reinvestment rate of 14% per year for excess funds and
10 % per year for borrowing rate for extra funds, determine: given MARR = 12%
Year
Net cash flow
0.
-50000
1
+22000
+38000
3.
-2000
4
-1000
+5000
a) How many number of ROR values is expected and why?
b) Calculate the external rate of return (MIRR).
c) Is the project economically viable?

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