Engineering Economy (17th Edition)
17th Edition
ISBN: 9780134870069
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 5, Problem 40P
To determine
Calculate the ERR.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
incremental rate of return analysis
MARR = 20%
%3|
1st
0=-8000 + 12.886,63(P/A,i*,15) + 533,33(P/Fi",15)
I*= ?
2nd
0=-2800 + 864,87(P/A,i",15) + 186,67(P/F,i*,15)
1*= ?
3rd
0=-2960 + 1297,32(P/A,i*,15) + 197,33(P/F,i*,15)
|*= ?
wie
4th
0=-1040 + 2767,6(P/A,i*,15) + 69,33(P/E.i*,15)
I*2
0=-2000 + 2508,13(P/A.i*,15)+ 133,34(P/E.i*,15)
I*= ?
A4
Please complete the things I have not filled out. I believe the best way to complete this is using excel. Also make sure to do the part that says to perform the incremental IRR analysis for the remaning alternatives (The part that has The IRR delta (C - A = ?? %). Thank You!
A deep water port for imported liquefied natural gas (LNG) is needed for three years. At the end of the third year, it will cost more to dismantle the LNG facility than it
produces in revenues. The cash flows are estimated as follows:
The IRR for this LNG facility is closest to which choice below?
Choose the closest answer below.
A. The IRR for the LNG facility is 9.5% per year.
B. The IRR for the LNG facility is 4.7% per year.
C. The IRR for the LNG facility is 12.2% per year.
D. The IRR for the LNG facility is 14.6% per year.
EOY
0
1
2
3
Net Cash Flow
- $54 million
44 million
40 million
- 24 million
Chapter 5 Solutions
Engineering Economy (17th Edition)
Ch. 5.A - Use the ERR method with = 8% per year to solve for...Ch. 5.A - Apply the ERR method with = 12% per year to the...Ch. 5.A - Are there multiple IRRs for the following...Ch. 5.A - Are there multiple IRRs for the following cash...Ch. 5 - Tennessee Tool Works (TTW) is considering...Ch. 5 - Prob. 2PCh. 5 - Prob. 3PCh. 5 - Prob. 4PCh. 5 - What is the capitalized worth of a project that...Ch. 5 - A large induced-draft fan is needed for an...
Ch. 5 - Prob. 7PCh. 5 - Prob. 8PCh. 5 - Prob. 9PCh. 5 - A corporate bond pays 5% of its face value once...Ch. 5 - Prob. 11PCh. 5 - Prob. 12PCh. 5 - Prob. 13PCh. 5 - The cash-flow diagram below has an internal rate...Ch. 5 - Prob. 15PCh. 5 - Prob. 16PCh. 5 - Prob. 17PCh. 5 - Prob. 18PCh. 5 - Prob. 19PCh. 5 - Your firm is thinking about investing 200,000in...Ch. 5 - Determine the FW of the following engineering...Ch. 5 - Prob. 22PCh. 5 - Fill in Table P5-23 below when P = 10,000, S = 2,...Ch. 5 - An asset has an initial capital investment of4...Ch. 5 - A simple, direct space heating system is currently...Ch. 5 - Prob. 26PCh. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Its easier to make money when interest rates in...Ch. 5 - Prob. 31PCh. 5 - Prob. 32PCh. 5 - Stan Moneymaker has been informed of a major...Ch. 5 - The required investment cost of a new, large...Ch. 5 - Prob. 35PCh. 5 - A parking garage has a capital investment cost of...Ch. 5 - The city of Oak Ridge is considering the...Ch. 5 - Prob. 38PCh. 5 - Prob. 39PCh. 5 - Prob. 40PCh. 5 - Prob. 41PCh. 5 - Prob. 42PCh. 5 - Prob. 43PCh. 5 - To purchase a used automobile, you borrow 10,000...Ch. 5 - Your boss has just presented you with the summary...Ch. 5 - Experts agree that the IRR of a college education...Ch. 5 - A company has the opportunity to take over a...Ch. 5 - The prospective exploration for oil in the outer...Ch. 5 - Prob. 49PCh. 5 - An integrated, combined cycle power plant produces...Ch. 5 - A computer call center is going to replace all of...Ch. 5 - Prob. 52PCh. 5 - Prob. 53PCh. 5 - Prob. 54PCh. 5 - The upturned wingtips on jet aircraft reduce drag...Ch. 5 - Prob. 56PCh. 5 - Prob. 57PCh. 5 - Prob. 58PCh. 5 - In southern California a photovoltaic (PV) system...Ch. 5 - a. Calculate the IRR for each of the three...Ch. 5 - Prob. 61PCh. 5 - A hospital germ-fighting and floor cleaning robot,...Ch. 5 - Prob. 63PCh. 5 - Prob. 64SECh. 5 - Prob. 65SECh. 5 - Prob. 66SECh. 5 - A certain medical device will result in an...Ch. 5 - Refer to Problem 5-61. Develop a spreadsheet to...Ch. 5 - Prob. 69CSCh. 5 - Prob. 70CSCh. 5 - Suppose that the average utilization of the CVD...Ch. 5 - Prob. 72FECh. 5 - Prob. 73FECh. 5 - Prob. 74FECh. 5 - Prob. 75FECh. 5 - Prob. 76FECh. 5 - Prob. 77FECh. 5 - Prob. 78FECh. 5 - Prob. 79FECh. 5 - A new machine was bought for 9,000 with life of...Ch. 5 - Prob. 81FECh. 5 - Prob. 82FECh. 5 - Prob. 83FECh. 5 - Prob. 84FECh. 5 - Prob. 85FE
Knowledge Booster
Similar questions
- You have received the proposal to invest $1,000,000 in exchange for receiving income of $75,000 at the end of the first month that would decrease 0.3% each month starting from the 2nd month. Expenses are estimated at $25,000 at each end of the month, starting from the 1st month. Assume that the proposal will last 5 years and that the minimum acceptable rate of return (m) is 1.5% per month. What does the Present Value criterion recommend? Show your work. If flow patterns are found (uniform, arithmetic, exponential), use factors.arrow_forwardThe American Pharmaceutical Company (APC) has a policy that all capital investments must have a three-year or less discounted payback period in order to be considered for funding. The MARR at APC is 7% per year. Is the above project able to meet this benchmark for funding? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 70er year. The payback period is years. (Round to the nearest whole number.) End of Year 1 2 3 4 5 6-8 Cash Flow - $275,000 - $25,000 $50,000 $180,000 $235,000 $330,000 $95,000arrow_forwardA piece of production equipment is to be replaced immediately because it no longer meets quality requirements for the end product. The two best alternatives are a used piece of equipment (E1) and a new automated model (E2). The economic estimates for each are shown in the accompanying table. The MARR is 15% per year. Click the icon to view the interest and annuity table for discrete compounding when i = 15% per year. a. Which alternative is preferred, based on the repeatability assumption? The AW of the alternative E1 is $. (Round to the nearest hundreds.) The AW of the alternative E2 is $. (Round to the nearest hundreds.) Which alternative is preferred? Choose the correct answer below. C Alternative E2 Alternative E1 O Capital investment Annual expenses Useful life (years) Market value (at the end of useful life) Alternative E1 Alternative E2 b. Which alternative is preferred, based on the coterminated assumption with a five-year study period and an imputed market value for the…arrow_forward
- A 2,000 square foot house New Jersey costs $1, 714 each winter to heat with its existing oil burning furnace For an investment of $5000, a natural gas furnace can be installed, and the winter heating bill is estimated to be $1,000. If the homeowner's MARR is 6% per year, what is the simple payback period of this proposed investment? 7 years 8 years 9 years 10 yearsarrow_forwardA company predicts they will make $1,321 per year over the next 19 years if they spend $2,497 on a machine (an asset with multi-year use). If the MARR is 16.0%, how much is this investment worth per year?arrow_forwardLignin is a basic component of almost any plant that grows, so it is one of the most abundant organic compounds in the world. Almost anything derived from oil can be made out of lignin. The question is "can we do it cost-effectively and consistently?" A startup company has developed a process to derive plastics, carbon fiber and other advanced materials from lignin. The cash flow diagram for this process is shown below (in $ millions). If the company's hurdle rate (MARR) is 21% per year, is this a profitable undertaking? A Click the icon to view the diagram for cash flows. = Click the icon to view the interest and annuity table for discrete compounding when the MARR is 21% per year. The present worth of the venture More info 90 75 60 45 30 15 1 4 5 6 7 8 9 15 ΕΟΥ 30 45arrow_forward
- A small company purchased now for 1.15M will lose 75,000 each year for the first 4 years. An additional P400,000 invested in the company during the 4th year will result in a profit of 27,500 from the 5th year through the 15th year. At the end of 15 years, the company can be sold for 1.65M.a. Determine the IRR. b. Calculate FW if MARR is 12%/year.c. Calculate ERR ϵ = 12% per year. Not in excelarrow_forwardLignin is a basic component of almost any plant that grows, so it is one of the most abundant organic compounds in the world. Almost anything derived from oil can be made out of lignin. The question is "can we do it cost-effectively and consistently?" A startup company has developed a process to derive plastics, carbon fiber and other advanced materials from lignin. The cash flow diagram for this process is shown below (in $ millions). If the company's hurdle rate (MARR) is 20% per year, is this a profitable undertaking? Click the icon to view the diagram for cash flows. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 20% per year. .... The present worth of the venture is $ million. (Round to two decimal places.)arrow_forwardLignin is a basic component of almost any plant that grows, so it is one of the most abundant organic compounds in the world. Almost anything derived from oil can be made out of lignin. The question is "can we do it cost-effectively and consistently?" A startup company has developed a process to derive plastics, carbon fiber and other advanced materials from lignin. The cash flow diagram for this process is shown below (in $ millions). If the company's hurdle rate (MARR) is 15% per year, is this a profitable undertaking? Click the icon to view the diagram for cash flows. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 15% per year. The present worth of the venture is $ million. (Round to two decimal places.) According to the PW Decision Rule, the investment V economically justified.arrow_forward
- A new airconditioning unit costs P150,000 and will have a salvage value of P15,000 after 5years. Electrical cost per kWh is P1.25. Calculate the annual savings in terms of electrical savings if MARR is 15% per year.arrow_forwardDetermine the IRR for this projectarrow_forwardA 2,000 square foot house in New Jersey costs $1,725 each winter to heat with its existing oil-burning furnace and expected to increase $25 each year. For an investment of $3,000, a natural gas furnace can be installed, and the winter heating bill is estimated to be $1,000 and expected to increase $15 each year. If the homeowner's MARR is 7% per year, what is the discounted payback period of this proposed investment? O Between 3 and 4 O Between 4 and 5 Between 5 and 6 Between 6 and 7arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education