You purchased a building five years ago for $200,000. Its annual maintenance expense has been $15,000 per year. At the end of three years, you spent $55,000 on roof repairs. At the end of five years (now), you sell the building for $250,000. During the period of ownership, you rented out the building for $60,000 per year paid at the beginning of each year. If your MARR is 8% per year. a) Use the PW and AW methods to evaluate this investment. b) Calculate IRR and ERR(( E=MARR). (Upload the picture of your complete solutions including the correct cash flow diagram and your conclusion.)

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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You purchased a building five years ago for
$200,000. Its annual maintenance expense has been
$15,000 per year. At the end of three years, you
spent $55,000 on roof repairs. At the end of five
years (now), you sell the building for $250,000.
During the period of ownership, you rented out the
building for $60,000 per year paid at the beginning of
each year. If your MARR is 8% per year.
a) Use the PW and AW methods to evaluate this
investment.
b) Calculate IRR and ERR(( E=MARR).
(Upload the picture of your complete solutions
including the correct cash flow diagram
and your conclusion.)
Transcribed Image Text:You purchased a building five years ago for $200,000. Its annual maintenance expense has been $15,000 per year. At the end of three years, you spent $55,000 on roof repairs. At the end of five years (now), you sell the building for $250,000. During the period of ownership, you rented out the building for $60,000 per year paid at the beginning of each year. If your MARR is 8% per year. a) Use the PW and AW methods to evaluate this investment. b) Calculate IRR and ERR(( E=MARR). (Upload the picture of your complete solutions including the correct cash flow diagram and your conclusion.)
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