EBK ENGINEERING ECONOMY
17th Edition
ISBN: 9780134838229
Author: Sullivan
Publisher: PEARSON
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Textbook Question
Chapter 5, Problem 1P
Tennessee Tool Works (TTW) is considering investment in five independent projects,
Any profitable combination of them is feasible.
TTW has$50million available to invest, and these funds are currently earning 7% interest annually from municipal bonds. If the funds available are limited to $50 million, what is TTW’s MARR that is implied by this particular situation? (5.2)
Expert Solution & Answer
To determine
Selection of the project.
Explanation of Solution
The firm has limited investment. It can select the project that give more profit rate in order to maximize the profit. Thus, the firm can select the project A, E and D. The MARR for the firm is equal the best return of the rejected projects. Since the best return from the rejected project is 12%, the firm’s MARR is 12%.
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Chapter 5 Solutions
EBK ENGINEERING ECONOMY
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