Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Just answer the B/C.
ANSWER: B/C conventional = 1, modified = 1

Transcribed Image Text:2. An investment of 105,815.40 can be made in a project that will produce a uniform
annual revenue of 53,000 for 5 years and then have a salvage value of 30,000.
Annual disbursements will be 30,000 each year for operation and maintenance
costs. The company's minimum attractive rate of return is 10%. Show whether
this is a desirable investment by using the discounted payback and B/C.
30,000
53,000 53,000 53,000 53,000 53,000
3
30,000 30,000' 30,000 30,000 30,000
2
5
105,815.40
MARR = 10%
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