2000:03:12You and a group of friends have purchased an annual lease at a commercial fishing pond for the last several years. It is possible torenew the lease for up to 5 years. Based on past costs, you calculated the AW values for different lease periods.Current Lease Renewal, yearsAW Value, $ per year||1213||45-9200-8100-8700-8900-9500Another lease option, a few miles further from your home, is available with an economic service life of 7 years and an AW of $-10000.Assuming all future costs remain unchanged, when should you renew the current lease? You value your recreation highly by using aMARR of 25% per year.The current lease should be renewed in2 years.

MARR stands for "Minimum Attractive Rate of Return." It is a financial concept used in various…

You and a group of friends have purchased an annual lease at a commercial fishing pond for the last several years. It is possible to renew the lease for up to 5 years. Based on past costs, you calculated the AW values for different lease periods. Current Lease Renewal, years AW Value, $ per year -9200 -8100 -8700 1 2 3 4 5 -8900 -9500 Another lease option, a few miles further from your home, is available with an economic service life of 7 years and an AW of $-10000. Assuming all future costs remain unchanged, when should you renew the current lease? You value your recreation highly by using a MARR of 25% per year. The current lease should be renewed in 2 years.

You and a group of friends have purchased an annual lease at a commercial fishing pond for the last several years. It is possible to renew the lease for up to 5 years. Based on past costs, you calculated the AW values for different lease periods. Current Lease Renewal, years AW Value, $ per year -9200 -8100 -8700 1 2 3 4 5 -8900 -9500 Another lease option, a few miles further from your home, is available with an economic service life of 7 years and an AW of $-10000. Assuming all future costs remain unchanged, when should you renew the current lease? You value your recreation highly by using a MARR of 25% per year. The current lease should be renewed in 2 years.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

20
00:03:12
You and a group of friends have purchased an annual lease at a commercial fishing pond for the last several years. It is possible to
renew the lease for up to 5 years. Based on past costs, you calculated the AW values for different lease periods.
Current Lease Renewal, years
AW Value, $ per year
||1
2
13
||4
5
-9200
-8100
-8700
-8900
-9500
Another lease option, a few miles further from your home, is available with an economic service life of 7 years and an AW of $-10000.
Assuming all future costs remain unchanged, when should you renew the current lease? You value your recreation highly by using a
MARR of 25% per year.
The current lease should be renewed in
2 years.

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