ENGINEERING FUNDAMENTALS
6th Edition
ISBN: 9781337705011
Author: MOAVENI
Publisher: CENGAGE L
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Chapter 20, Problem 46P
To determine
Check whether the company will invest in the project or not using the Excel function.
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Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects
of this risk class is 12 percent, and that the maximum allowable payback and discounted payback statistics for your company are
2.5 and 3.0 years, respectively.
Time:
Cash flow:
0
1
2
3
-$227,000
$65,000
$83,200
$140,200
4
$121,200
5
$80,400
Use the payback decision rule to evaluate this project.
Note: Round your answer to 2 decimal places.
Payback
years
Q.4
A company is planning to expand its business after 5 years from now. The expected money required for the expansion
program is $50 000 000. The company can invest $5 000 000 at the end of every year for the next five years. If the
assured rate of return of investment is 10% for the company, check whether the accumulated sum in the account would
be sufficient to meet the fund for the expansion program. If not, find the difference in amounts for which the company
should make some other arrangement after 5 years?
The cash flows and initial investment for two different projects are given below.
Calculate the internal rate of return for the projects. Based on IRR identify which
project should be accepted. (Higher rate take value between 18% & 20%.
Years
Project X Project Y
130,000 85,000
1
25,000 40,000
2
35,000 35,000
3
45,000 30,000
4
50,000 10,000
5
55,000 5,000
Cost of capital 12%
12%
Chapter 20 Solutions
ENGINEERING FUNDAMENTALS
Ch. 20.4 - Prob. 1BYGCh. 20.4 - Prob. 2BYGCh. 20.4 - Prob. 3BYGCh. 20.4 - Prob. 4BYGCh. 20.4 - Prob. 5BYGCh. 20.4 - Prob. BYGVCh. 20.5 - Prob. 1BYGCh. 20.5 - Prob. 2BYGCh. 20.5 - Prob. 3BYGCh. 20.5 - Prob. BYGV
Ch. 20.8 - Prob. 1BYGCh. 20.8 - Prob. 2BYGCh. 20.8 - Prob. 3BYGCh. 20 - Prob. 1PCh. 20 - Prob. 2PCh. 20 - Prob. 3PCh. 20 - Prob. 4PCh. 20 - Prob. 5PCh. 20 - Prob. 6PCh. 20 - Prob. 7PCh. 20 - Prob. 8PCh. 20 - Prob. 9PCh. 20 - Prob. 10PCh. 20 - Prob. 11PCh. 20 - Prob. 12PCh. 20 - Prob. 13PCh. 20 - Prob. 14PCh. 20 - Prob. 15PCh. 20 - Prob. 16PCh. 20 - Prob. 17PCh. 20 - Prob. 18PCh. 20 - Prob. 19PCh. 20 - Prob. 20PCh. 20 - Prob. 21PCh. 20 - Prob. 22PCh. 20 - Prob. 23PCh. 20 - Prob. 24PCh. 20 - Prob. 25PCh. 20 - Prob. 26PCh. 20 - Prob. 27PCh. 20 - Prob. 28PCh. 20 - Prob. 29PCh. 20 - Prob. 30PCh. 20 - Prob. 31PCh. 20 - Prob. 32PCh. 20 - Prob. 33PCh. 20 - Prob. 34PCh. 20 - Prob. 35PCh. 20 - Prob. 36PCh. 20 - Prob. 37PCh. 20 - Prob. 38PCh. 20 - Prob. 39PCh. 20 - Prob. 40PCh. 20 - Prob. 41PCh. 20 - Prob. 42PCh. 20 - Prob. 43PCh. 20 - Prob. 44PCh. 20 - Prob. 45PCh. 20 - Prob. 46PCh. 20 - Prob. 47PCh. 20 - Prob. 48PCh. 20 - Prob. 49PCh. 20 - Prob. 50PCh. 20 - Prob. 52PCh. 20 - Prob. 53PCh. 20 - Prob. 54P
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