If we think the investment is sensitive to annual revenues, what is its breakeven point for the project? Initial Investment: $50,000Annual Revenues: $20,000Annual Operating Costs: $2,500Salvage Value @ EOY 5: $10,000Study Period: 5 yearsMARR: 20%

Answered: Initial Investment: $50,000 Annual…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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If we think the investment is sensitive to annual revenues, what is its breakeven point for the project?

Initial Investment: $50,000
Annual Revenues: $20,000
Annual Operating Costs: $2,500
Salvage Value @ EOY 5: $10,000
Study Period: 5 years
MARR: 20%

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Step 1

MARR stands for "Minimum Acceptable Rate of Return". It is the minimum rate of return or discount rate that an investor or company requires from an investment to compensate for the risk and opportunity cost of the investment.

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