The cash flows for your firm's project are provided in the table below. When initially finding the rate of return for the project, you see that there are two possible positive rates of return. Find an appropriate ROR to use if the company borrows money at 7% and invests money at 15%. If the company uses a MARR of 10%, should this project be funded? EOY (in millions of $) -4.00 1 1.00 2 2.00 3 3.00 4 3.00 2.00 1.00 7 -9.00 Question 4 Part A: Select the appropriate interest rates to use for this scenario from below. Present Worth of Net Expenses: 7%. Future Worth of Net Revenues: 15% Present Worth of Net Revenues: 7%. Future Worth of Net Expenses: 15% O Present Worth of Net Expenses: 15%. Future Worth of Net Revenues: 7% Present Worth of Net Revenues: 15%. Future Worth of Net Expenses: 7%

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Q. 3
Question 4 Part B: Provide the formula for equating the Present Worth and Future Worth using
the MIRR.
O -PW = ((1+MIRR)^n) * FW
-FW = ((1+MIRR)^n) * PW
-PW = ((1+MIRR)^1/n) * FW
O -FW = ((1+MIRR)^1/n) * PW
Question 4 Part C: Provide the computed MIRR for this project. Enter your answer in the form:
12.34 (for a MIRR of 12.34%, enter 12.34)
Question 4 Part D: Should this project be funded based on the MIRR that you found in Part C?
The MIRR is greater than the MARR. This means the project should not be funded.
O The MIRR is less than the MARR. This means the project should not be funded.
O The MIRR is less than the MARR. This means the project should be funded.
O The MIRR is greater than the MARR. This means the project should be funded.
Transcribed Image Text:Question 4 Part B: Provide the formula for equating the Present Worth and Future Worth using the MIRR. O -PW = ((1+MIRR)^n) * FW -FW = ((1+MIRR)^n) * PW -PW = ((1+MIRR)^1/n) * FW O -FW = ((1+MIRR)^1/n) * PW Question 4 Part C: Provide the computed MIRR for this project. Enter your answer in the form: 12.34 (for a MIRR of 12.34%, enter 12.34) Question 4 Part D: Should this project be funded based on the MIRR that you found in Part C? The MIRR is greater than the MARR. This means the project should not be funded. O The MIRR is less than the MARR. This means the project should not be funded. O The MIRR is less than the MARR. This means the project should be funded. O The MIRR is greater than the MARR. This means the project should be funded.
The cash flows for your firm's project are provided in the table below. When initially finding the
rate of return for the project, you see that there are two possible positive rates of return. Find an
appropriate ROR to use if the company borrows money at 7% and invests money at 15%. If the
company uses a MARR of 10%, should this project be funded?
EOY
(in millions of $)
-4.00
1
1.00
2.00
3
3.00
4
3.00
5
2.00
6
1.00
7
-9.00
Question 4 Part A: Select the appropriate interest rates to use for this scenario from below.
O Present Worth of Net Expenses: 7%. Future Worth of Net Revenues: 15%
Present Worth of Net Revenues: 7%. Future Worth of Net Expenses: 15%
Present Worth of Net Expenses: 15%. Future Worth of Net Revenues: 7%
O Present Worth of Net Revenues: 15%. Future Worth of Net Expenses: 7%
Transcribed Image Text:The cash flows for your firm's project are provided in the table below. When initially finding the rate of return for the project, you see that there are two possible positive rates of return. Find an appropriate ROR to use if the company borrows money at 7% and invests money at 15%. If the company uses a MARR of 10%, should this project be funded? EOY (in millions of $) -4.00 1 1.00 2.00 3 3.00 4 3.00 5 2.00 6 1.00 7 -9.00 Question 4 Part A: Select the appropriate interest rates to use for this scenario from below. O Present Worth of Net Expenses: 7%. Future Worth of Net Revenues: 15% Present Worth of Net Revenues: 7%. Future Worth of Net Expenses: 15% Present Worth of Net Expenses: 15%. Future Worth of Net Revenues: 7% O Present Worth of Net Revenues: 15%. Future Worth of Net Expenses: 7%
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