• Smalltown, PA currently has a $38,000/year contract with a private company to transport students to their school and back. Smalltown can buy a bus for $40,000 that will be adequate for the next 5 years. Operating and maintenance costs are estimated to be $25,000 per year. At the end of 5 years, the bus will have an estimated salvage value of $5,000. Their MARR is 10%/year. a. What is the Excel or closed form equation (along with the value of relevant parameters) to determine this investment's internal rate of return?

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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• Smalltown, PA currently has a $38,000/year contract with a
private company to transport students to their school and
back. Smalltown can buy a bus for $40,000 that will be
adequate for the next 5 years. Operating and maintenance
costs are estimated to be $25,000 per year. At the end of 5
years, the bus will have an estimated salvage value of
$5,000. Their MARR is 10%/year.
а.
What is the Excel or closed form equation (along with the
value of relevant parameters) to determine this investment's
internal rate of return?
Transcribed Image Text:• Smalltown, PA currently has a $38,000/year contract with a private company to transport students to their school and back. Smalltown can buy a bus for $40,000 that will be adequate for the next 5 years. Operating and maintenance costs are estimated to be $25,000 per year. At the end of 5 years, the bus will have an estimated salvage value of $5,000. Their MARR is 10%/year. а. What is the Excel or closed form equation (along with the value of relevant parameters) to determine this investment's internal rate of return?
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