Patti's project has an IRR of 15 percent, first cost P, and annual savings A. She observed that the salvage value, S, at the end of the five-year life of the project was exactly a third of the purchase price and that the present worth of the project was exactly double the annual savings. What was Patti's MARR?
Patti's project has an IRR of 15 percent, first cost P, and annual savings A. She observed that the salvage value, S, at the end of the five-year life of the project was exactly a third of the purchase price and that the present worth of the project was exactly double the annual savings. What was Patti's MARR?
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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Transcribed Image Text:Patti's project has an IRR of 15 percent, first cost P, and annual savings A. She observed that the salvage value, S, at the end of the five-year life of the project
was exactly a third of the purchase price and that the present worth of the project was exactly double the annual savings. What was Patti's MARR?
Click the icon to view the table of compound interest factors for discrete compounding periods when i = 15%.
Patti's MARR was
percent.
(Round to one decimal place as needed.)
Transcribed Image Text:Compound interest factors for discrete compounding, discrete cash flows (i=15%)
Single Payment
Uniform Series
Series
Arithmetic
Сapital
Recovery
Compound Present
Sinking
Uniform
Present
Gradient
Amount
Worth
Fund
Series
Worth
Series
Factor
Factor
Factor
Factor
Factor
Factor
Factor
N
(P/A,i,N)
(F/P,i,N)
1.1500
(P/F,i,N)
(A/F,i,N)
(F/A,i,N)
1.00000
(A/P,i,N)
(A/G,i,N)
1
0.88957
1.0000
1.1500
0.86957
0.00000
2
1.3225
0.75614
0.46512
2.1500
0.61512
1.6257
0.46512
1.5209
0.65752
0.28708
3.4725
0.43798
2.2832
0.90713
4
1.7490
0.57175
2.8550
0.20027
0.14832
4.0934
0.35027
1.3263
2.0114
0.49718
6.7424
0.29832
3.3522
1.7228
2.3131
0.43233
0.11424
8.7537
0.26424
3.7845
2.0972
7
2.6600
0.37594
0.09036
11.067
0.24036
4.1604
2.4498
3.0590
0.32690
0.07285
13.727
0.22285
4.4873
2.7813
3.5179
0.28426
0.05957
16.786
0.20957
4.7716
3.0922
10
4.0458
0.24718
0.04925
20.304
0.19925
5.0188
3.3832
11
4.6524
0.21494
0.04107
24.349
0.19107
5.2337
3.6549
12
5.3503
0.18691
0.03448
29.002
0.18448
5.4206
3.9082
13
6.1528
0.18253
0.02011
34.352
0.17911
5.5831
4.1438
14
7.0757
0.14133
0.02469
40.505
0.17409
5.7245
4.3624
15
8.1371
0.12289
0.02102
47.580
0.17102
5.8474
4.5650
16
9.3576
0.10886
0.01795
55.717
0.16795
5.9542
4.7522
17
10.761
0.00203
0.01537
65.075
0.18537
6.0472
6.1280
4.0251
18
12.375
0.08081
0.01319
75.836
0.16319
5.0843
19
14.232
0.07027
0.01134
88.212
0.16134
6.1982
5.2307
20
18.387
0.06110
0.00976
102.44
0.15976
6.2593
5.3651
21
18.822
0.05313
0.00842
118.81
0.15842
6.3125
5.4883
22
21.645
0.04820
0.00727
137.63
0.15727
6.3587
5.6010
23
24.891
0.04017
0.00828
159.28
0.15628
6.3988
5.7040
24
28.825
0.03493
0.00543
184.17
0.15543
6.4338
5.7979
25
32.919
0.03038
0.00470
212.79
0.15470
6.4841
5.8834
26
37.857
0.02642
0.00407
245.71
0.15407
6.4906
5.9612
27
43.535
0.02297
0.00353
283.57
0.15353
6.5135
6.0319
28
50.068
0.01997
0.00306
327.10
0.15306
6.5335
6.0960
29
57.575
0.01737
0.00265
377.17
0.15285
6.5509
6.1541
30
66.212
0.01510
0.00230
434.75
0.15230
6.5000
8.2068
31
76.144
0.01313
0.00200
500.96
0.15200
6.5791
6.2541
32
87.585
0.01142
0.00173
577.10
0.15173
6.5905
6.2970
33
100.70
0.00003
0.00150
664.67
0.15150
6.6005
6.3357
34
115.80
0.00864
0.00131
765.37
0.15131
6.6001
6.3705
35
133.18
0.00751
0.00113
881.17
0.15113
6.6166
6.4019
40
267.86
0.00373
0.00056
1779.1
0.15056
6.6418
6.5168
45
538.77
0.00186
0.00028
3585.1
0.15028
6.6543
6.5830
50
1083.7
0.00092
0.00014
7217.7
0.15014
6.6605
6.6205
55
2179.6
0.00046
0.00007
14524.0
0.15007
6.6636
6.6414
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