The minimum attractive rate of return (MARR), is considered as the lowest interest rate that will induce companies or individuals to invest their money. Select one: O True O False

One method of analyzing the financial feasibility of a farm land investment involves comparing the investment's cash flow with the Required debt repayment in the first year of the investment O Number of tractors/implements required to efficiently work the land Size of the operating loan O Cash flow from other operations

A

Prob.#1 At the Motorola plant in Mesa, AZ, it is desired to determine whether one-inch-thick insulation or two-inch-thick insulation should be used to reduce heat loss from a long section of steam pipe. The heat loss from the pipe without any insulation would cost $2.00 per linear foot per year. The one- inch-thick insulation option will eliminate 88% of the heat loss and will cost $0.60 per foot. Two-inch insulation will eliminate 95% of the heat loss and will cost $1.10 per foot. The steam pipe is 1,000 feet in length and will last 10 years. MARR is 6% per year. Which insulation thickness should be recommended? Apply Equivalent Uniform Annual Worth technique. please show all work for each type.

John wants to invest $1 000 000. He has two options. The first option is to buy government bonds that earn 4% annually. The second option is to buy an apartment building that brings him $100 000 per year in revenues. Compare the two options in terms of their internal rates of return. (Your answer in the answer box should be either 1 or 2). Calculations should be provided.

Cost benefit analysis allows a business owner to identify the investment alternative with the highest return. True False

(1) Given that the benefit/cost ratio for project X is B/C(X) and that of higher ranked project Y is B/C(Y), then project Y will be preferred over X if the incremental benefit/cost ratio is greater than A. B/C(X) OB. B/C(Y) OC. One OD. Zero OE. MARR (2) Given that the internal rate of return for project X is IRR(X) and that of higher ranked project Y is IRR(Y), then project Y will be preferred over X if the incremental rate of return is greater than A. MARR OB. One OC. IRR(Y) OD. Zero OE. IRR(X)

For the following diagram, assume P= $500 and A= $1100. Compute the rate of return (%): 0 1 2 3 4 5 6 7 8 9 The answer is close to O 13 O 17 O 15 O 19 10 5000 A 11 12 13 14 15 16 17 18 19 20 n = 00

What do you know about the mathematical value of the internal rate of return of a project under each of the following conditions? a. The annual worth of the project is greater than zero. b. The annual worth of the project is equal to zero. c. The annual worth of the project is less than zero.

Assume a pool of 115 people in an insurance pool (a group of people insured through community rating). It is estimated that a small number in the pool will have significant pre- existing conditions as indicated in the table. Based on the age of these 115 people, the insurance company estimates the following distribution of health care claims (which includes necessary profit and administrative costs of the insurance company). Number of Insured Antidipated Heath Costs/Year/Person $1,400 $1,500 $1,600 $1,700 $1,800 $1,900 $2,000 $2,100 $2,200 $2.300 $2,400 $2,500 $2,700 $2,000 $2,900 $3,000 $3,100 $3.200 $3.300 $4,000 57,00 $10,000 Everyone joins the poal ad pays the necessary premum in the first year. The clams experience of the customers is faund to be generaly consstent with expeclations of the insurance company. A) What would be the premium In the third year if there is no inflation, based on the company's oxperience from the past year? B) If those customers who have anticipated…