Rincon, LLC is considering a project that will require an initial investment of $750,000 with estimated net income of $135,000 per year for 10 years. (a) Determine the IROR, PI, and PW values at MARR = 12% per year. (b) For which of these measures is the project economically justified? (c) Reflect on the answers above and the breakeven i*. Is there any MARR value that will cause any of the three measures to result in different conclusions about the economic viability of the project? Explain your answer.
Rincon, LLC is considering a project that will require an initial investment of $750,000 with estimated net income of $135,000 per year for 10 years. (a) Determine the IROR, PI, and PW values at MARR = 12% per year. (b) For which of these measures is the project economically justified? (c) Reflect on the answers above and the breakeven i*. Is there any MARR value that will cause any of the three measures to result in different conclusions about the economic viability of the project? Explain your answer.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Rincon, LLC is considering a project that will require
an initial investment of $750,000 with estimated
net income of $135,000 per year for
10 years. (a) Determine the IROR, PI, and PW values
at MARR = 12% per year. (b) For which of
these measures is the project economically justified?
(c) Reflect on the answers above and the
breakeven i*. Is there any MARR value that will
cause any of the three measures to result in different
conclusions about the economic viability of the
project? Explain your answer.
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