Prob. 4 Consider the following two projects. Which project would you select on the basis of rate of return, assuming MARR = 15% A2 A1 -9000 -12000 1 900 6000 3500 3400 5500 2300 3200 2800 1200 1600 Select Project = Reason: 23

Principles of Accounting Volume 2
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ISBN:9781947172609
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Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 19EB: Wallace Company is considering two projects. Their required rate of return is 10%. Which of the two...
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Problem 4. Which project would you select on the basis of rate of return, assuming MARR =15%. Please use excel spreadsheet to answer.
Calculate the PW and IRR of this transaction. At the given MARR, is
this a good purchase?
Initial Investment
15000
Annual Labor savings
8000
Annual maintenance costs
2500
Salvage value
N = 6 yrs
2000
PW =
MARR = 15%
IRR =
Good/Bad
Prob. 4
Consider the following two projects. Which project would you select
on the basis of rate of return, assuming MARR = 15%
A2
A1
-9000
-12000
1
900
6000
3500
3400
3
5500
2300
3200
2800
5
1200
1600
Select Project =
Reason:
stv
RA A O
DO0
吕0
Transcribed Image Text:Calculate the PW and IRR of this transaction. At the given MARR, is this a good purchase? Initial Investment 15000 Annual Labor savings 8000 Annual maintenance costs 2500 Salvage value N = 6 yrs 2000 PW = MARR = 15% IRR = Good/Bad Prob. 4 Consider the following two projects. Which project would you select on the basis of rate of return, assuming MARR = 15% A2 A1 -9000 -12000 1 900 6000 3500 3400 3 5500 2300 3200 2800 5 1200 1600 Select Project = Reason: stv RA A O DO0 吕0
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