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- Project A Project B Year Cash Flow Year Cash Flow 0 -1,000 0 -2,000 1 900 1 900 2 900 2 900 3 900 3 900 4 900 4 900 5 5 900 6 6 900 If the discount rate is 12% and you have to choose between these two projects, what is the equivalent annual series of the best project? Question 4…How many liras will a manager who receives a loan of 24000 lira with a monthly interest rate of 12% pay to the bank after 6 months?A) 32000B) 25440C) 28200D 27000E) 26320Answer both parts...
- 2a. What is the duration (life) of the project if the MARR used by Jane was 1%A proposed project has the following costs and benefits. Using linear interpolation, the project’s discounted payback period (use i=10%) is _____________. Year Costs Benefits 0 $4,000 1 $1,200 2 $1,200 3 1,000 4 1,000 5 3,000 6 2,000 A. 6.35 years B. 5.82 years C. 4.24 years D. 3.37 years
- The city of St. John's is intalling a new swimming pool in the east end recreation centre. One design being considered is a reinforced concrete pool that will cost $5,400,000 to install. Thereafter, the inner surface of the pool will need to be refinished and painted every 5 years at a cost of $440,000 per refinishing. Assuming that the pool will have essentially an infinite life, what is the present worth of the costs associated with the pool design? The city uses a MARR of 10%. If the installation costs, refinishing costs, and MARR are subject to 5% or 10% increases or decreases, how is the present worth affected? (NOTE: Text answers are case sensitive and every field in this question is worth equal value) All calculations are performed using 4 significant figures. (a) Complete the table below: Sensitivity Analysis Calculated Values Parameter Construction Costs Refinishing Costs MARR [%] -10% -5% Base Case 5,400,000 440,000 10 +5% +10%Consider the following two mutually exclusive projects being considered by an agency. The agency's MARR is 5% per year and the projects have a service life of 5 years. Initial cost Annual revenues Present Worth (PW) Answer the following questions. Project 1 $14,200 $3,832 O A. No B. Yes $2,391 Project 2 $21,700 $5,608 $2,580 a. Based on the PW, the project that is more economical is Project b. Calculate the IRR of each alternative (use the trial-and-error method) % (Round to the nearest one decimal place) The IRR of Project 1 is The IRR of Project 2 is % (Round to the nearest one decimal place) (Enter the project number). c. Perform the incremental IRR analysis to determine the project that is more economical: Incremental IRR =% (Round to the nearest one decimal place); Therefore, based on the incremental IRR, Project is more economical. d. Do the two methods produce the same recomendation for the most economical project?7 ! Required information Consider the cash flows shown. Year Revenues, $ Costs, $ 0 1 2 19,000 0 25,000 -6,000 -30,000 -7,000 NOTE: This is a multi-part question. Once an answer is submitted, you will be unable to return to this part. The spreadsheet function is MIRR(B1:B5,10%,18%) 3 4,000 -5,500 Determine the external rate of return using the MIRR method if ir = 18% per year and ib= 10% per year. Verify your answer with the spreadsheet function. The external rate of return is 4 28,000 -13,000 % per year.
- If ɛ = 11% per year, what is the ERR for the cash flows of this project? Let MARR = 11% per year. EOY 1 3 4 5 6 7 8 10 Cash Flow ($) 110 80 50 20 - 1,820 600 480 370 330 190 120 ..... The ERR for the cash flows of this project is %. (Round to two decimal places.)A farmer is considering adopting a soil conservation practice that will raise his profits next year and every year after for a total of 5 years by $100. He has the alternative of putting his money in the bank, which would pay %5 per year. The maximum amount that the farmer would be willing to pay immediately for the practice is $________.Please explain,
