Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Question
Chapter 7, Problem 17P
(a):
To determine
Calculate the
(b):
To determine
Classification of simple and complex investment.
(c):
To determine
Calculate the possible number of interest rate.
(d):
To determine
Calculate the IRR
(e):
To determine
Calculate the MIRR
(f):
To determine
Calculate the net investment test.
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Students have asked these similar questions
Plz complete solution all part a and b
select projects options are 3, 2, 1&3, 2&3, or 1&2
If mutually exclusive projects with normal cash flows are being analyzed, the net present value (NPV) and internal rate of return (IRR) methods
always
agree.
Projects Y and Z are mutually exclusive projects. Their cash flows and NPV profiles are shown as follows.
Year
Project Y Project Z
0
-$1,500
-$1,500
1
$200
$900
2
$400
$600
3
$600
$300
4
$1,000
$200
NPV (Dollars)
800
600
Project Y
400
Project Z
200
-200
0246
8
10 12 14 16 18 20
COST OF CAPITAL (Percent)
If the weighted average cost of capital (WACC) for each project is 14%, do the NPV and IRR methods agree or conflict?
O The methods agree.
O The methods conflict.
Chapter 7 Solutions
Contemporary Engineering Economics (6th Edition)
Ch. 7 - Prob. 1PCh. 7 - Prob. 2PCh. 7 - Prob. 3PCh. 7 - Prob. 4PCh. 7 - Prob. 5PCh. 7 - Prob. 6PCh. 7 - Prob. 7PCh. 7 - Prob. 8PCh. 7 - Prob. 9PCh. 7 - Prob. 10P
Ch. 7 - Prob. 11PCh. 7 - Prob. 12PCh. 7 - Prob. 13PCh. 7 - Prob. 14PCh. 7 - Consider an investment project with the cash flows...Ch. 7 - Consider the investment projects given in Table...Ch. 7 - Prob. 17PCh. 7 - Prob. 18PCh. 7 - Consider the investment projects given in Table...Ch. 7 - Consider the investment projects given in Table...Ch. 7 - Prob. 21PCh. 7 - Prob. 22PCh. 7 - Consider the investment projects given in Table...Ch. 7 - Prob. 24PCh. 7 - Prob. 25PCh. 7 - Prob. 26PCh. 7 - Prob. 27PCh. 7 - Prob. 28PCh. 7 - Prob. 29PCh. 7 - Prob. 30PCh. 7 - Prob. 31PCh. 7 - Prob. 32PCh. 7 - Prob. 33PCh. 7 - Prob. 34PCh. 7 - Prob. 35PCh. 7 - Prob. 36PCh. 7 - Prob. 37PCh. 7 - Prob. 38PCh. 7 - Prob. 39PCh. 7 - Prob. 40PCh. 7 - Prob. 41PCh. 7 - Prob. 42PCh. 7 - Consider the two mutually exclusive investment...Ch. 7 - You are considering two types of automobiles....Ch. 7 - Prob. 45PCh. 7 - Prob. 46PCh. 7 - Fulton National Hospital is reviewing ways of...Ch. 7 - Prob. 48PCh. 7 - Consider the investment projects given in Table...Ch. 7 - Prob. 50PCh. 7 - Prob. 51PCh. 7 - Prob. 52PCh. 7 - Prob. 53PCh. 7 - Prob. 54PCh. 7 - Prob. 55PCh. 7 - Prob. 56PCh. 7 - Prob. 57PCh. 7 - Prob. 1STCh. 7 - Prob. 2STCh. 7 - Prob. 3STCh. 7 - Prob. 4STCh. 7 - Prob. 5ST
Knowledge Booster
Similar questions
- A project your firm is considering for implementation has these estimated costs and revenues: an investment cost of $58,548, maintenance costs that start at $5,000 at end-of-year (FOY) one and increase by $1,000 for each of the next four years, and then remain constant for the following five years; savings of $20,007 per year (EOY 1-10); and finally a resale value of $33,311 at EOY 10. If the project has a 10-year life and the firm's MARR is 10% per year, what is the present worth of the project?arrow_forwardwhat is the rate of return for each alternative and for the incremental difference? if the MARR is 10%, which alternative should be selected? Alternatives A and B require investments of $10,310 and $13,400, respectively. Their respective net annual cash inflows are $3,300 and $4,000. What is the rate of return for each alternative and for thearrow_forwardTheoretically, when we are going through the procedure to calculate the incremental ROR (ΔROR), we will assume that the “current best” option is “do nothing (DNT).” a) true b) falsearrow_forward
- What is the rate of return for the following incremental analysis. Investment 1 2 Initial Investment $29,857 $40,955 Annual Return $14,657 $13,650 Salvage Value $29,857 $40,955arrow_forwardThe capitalized cost (CC) of the given project whose Cash Flow diagram is given below is closest to: j= 12% per year 1 3 6 7 8 9 10 11 A= $2,000 A= $5,000 PO=$50,000 Capitalized Cost= ? $-83,754 O $-78,145 O $-75,895 $-85,500 $-80,852arrow_forwardIn general, the IRR comparison method and the PW comparison method Question options: A produce the same decisions for independent projects but not for mutually exclusive projects B produce the same decisions for mutually exclusive projects but not for independent projects C produce different decisions for both independent projects and mutually exclusive projects D produce the same decisions for both independent projects and mutually exclusive projects E produce the same decisions for projects with unequal livesarrow_forward
- If you invest $5,095 in a long-term venture, you will receive $1,000 per year forever. Assuming your interest rate is 8% per year, what is the capitalized worth of your investment? Choose the closest answer below. OA. The capitalized worth of your investment is $7,836. OB. The capitalized worth of your investment is $7,405. OC. The capitalized worth of your investment is $4,169. OD. The capitalized worth of your investment is $7,789.arrow_forwardAli is a Planning engineer considered the following three mutually exclusive investment projects (A, B, and C) at PTUK. He summarized the relevant data provided for these projects as; for project A, the initial investment is -200 , annual return is 22 and the salvage value is 200. For project B, the initial investment is -4000, salvage value is 2600 and the annual return is 620. For project C, the initial investment is -5450, annual retum is 740 and salvage value is 4300. The useful life for these projects is similar which is 5 years, and MARR=10% . Which alternatives are feasible based on their ROR.arrow_forwardDecision D6, which has three possible choices (X, Y, or Z), must be made in year 3 of a 6-year study period in order to maximize EPW). Using an MARR of 18% per year, the investment required in year 3, and the estimated cash flows for years 4 through 6, determine which decision should be made in year 3. High Low High 06 Low 2 High Low Investment, Cash Flow, (Year Cash Flow, $1000 Cash Flow, Year 31 3) (Year 4) $1000 (Year 5) Cash Flow, $1000 (Year 6) Outcome Probability 3 4 5 6 High (X) $-150,000 $50 $50 $50 0.5 Low (X) $40 $30 $20 0.5 High (Y) $-73,000 $30 $40 $50 0.45 Low (Y) $30 $30 $30 0.55 High (Z) $-240,000 $190 $170 $150 0.7 Low (Z) $-30 $-30 $-30 0.3 The present worth of X is $arrow_forward
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