For Nos. 48-50. A special purpose machine is to be acquired by paying a P15.000 initial cash payment plus a debt assumption of P135.000. The machine will generate additional net annual cash inflow of P40.000 for the firm throughout the 10 years of useful life of the asset. At the end of its life, a salvage value of 10% of its initial cost will be realized. Assuming that the MARR is 20% per annum, 48. Is the project justified using the IRR method? A. IRR = 0.1572: Since IRR MARR, project is not justified. B. IRR = 0.1984; Since IRR < MARR, project is not justified. C. IRR = 0.2379: Since IRR > MARR, project is justified. D. IRR = 0.2762: Since IRR > MARR, project is justified.

For Nos. 48-50. A special purpose machine is to be acquired by paying a P15.000 initial cash payment plus a debt assumption of P135.000. The machine will generate additional net annual cash inflow of P40.000 for the firm throughout the 10 years of useful life of the asset. At the end of its life, a salvage value of 10% of its initial cost will be realized. Assuming that the MARR is 20% per annum, 48. Is the project justified using the IRR method? A. IRR = 0.1572: Since IRR MARR, project is not justified. B. IRR = 0.1984; Since IRR < MARR, project is not justified. C. IRR = 0.2379: Since IRR > MARR, project is justified. D. IRR = 0.2762: Since IRR > MARR, project is justified.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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