Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 7, Problem 23P
Consider the investment projects given in Table P7.23.
Assume that MARR = 12% in the following questions.
- (a) Classify each project as either a pure or a mixed investment.
- (b) Compute the true
IRR for each investment. - (c) Compute the MIRR for each project at MARR = 12%.
- (d) Determine the acceptability of each project.
TABLE P7.23
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An energy management system that can save $8,040 per year for four (4) years, expenses are $2,000 per year, can be installed at a cost of $20,000. At the end of four (4) it is expected to be sold
for $1,250. Using the end of year convention, the rate of return on this planned investment is most nearly:
1.ROR = 9.81%
2. ROR = 10%
03. ROR = 9.5%
04.ROR = 6%
!
MARR = 8%. Your consultancy business signs on with a new client. The client pays you $5000 up front as deposit toward future work. One year later the client makes another payment of $5000. The year after that you invest $16,000 into the project. The following year, in the third year, the client pays you the remaining balance of $5388. The project's precise ERR is within 0.5% of a) 12% b) 13% c) 4% d) 15% e) None of the above
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
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- Anne made an investment of P8,000,000.00 and earns a yearly gross income of P5,000,000.00. The projected annual costs for his operation are as follows: labor costs of P1,000,000.00; material costs of P1,500,000.00; and opportunity costs of P1,200,000.00. If his company has a 20% Rate of Return goal, decide if this project is in line with Anne's objective or not.arrow_forwardPlease provide steps by step answer with proper calculation with final answer......arrow_forward❖ Problem 1 Using Microsoft Excel, create an investment cash-flow diagram that will have a present worth of zero using MARR = 12.75%. The study period needs to be exactly 10 years and each year should have at least one unique cash flow that is different from the cash flows over the other years. Your answer should contain a table showing the cash flows for each year and a graphical representation of the cash flows (cash-flow diagram).arrow_forward
- do fast.arrow_forwardBulaklak Oil Company must install anti-pollution equipment in a new refinery in Bataan to meet clean air legislation. It is considering three types of equipment, and the following data are available:Use MARR = 20%, repeatability assumption and solution by PW.arrow_forward6-11. Compare two projects: Project A with an initial investment of $100,000 and returns of $30,000 per year for five years, and Project B with $135,000 initial investment and returns of $40,000 per year for five years. Which has a higher IRR? Which should be selected if the company MARR is 9% per year? (6.4)arrow_forward
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