EBK CONTEMPORARY ENGINEERING ECONOMICS
6th Edition
ISBN: 9780134123950
Author: Park
Publisher: PEARSON CUSTOM PUB.(CONSIGNMENT)
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Textbook Question
Chapter 7, Problem 19P
Consider the investment projects given in Table P7.19.
Assume that MARR = 12% in the following questions:
- (a) Identify the i*(’s) for each investment. If the project has more than one i*, identify all of them.
- (b) Which project(s) is (are) a mixed investment?
- (c) Compute the 1RR for each project.
- (d) Compute the MIRR for each project at MARR = 12%.
- (e) Determine the acceptability of each project.
TABLE P7.19
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The following cash flows result from a potential construction project for your company:
1. Receipts of $505,000 at the start of the contract and $1,200,000 at the end of the fourth year
2. Expenditures at the end of the first year of $400,000 and at the end of the second year of $900,000
3. A net cash flow of $0 at the end of the third year.
Using an appropriate rate of return method (Approximate ERR), for a MARR of 20%, should your company accept this project
(Perform all calculations using 5 significant figures and round your answer to one decimal place. Also remember that text
answers are case-sensitive):?
Answers entered using text are case sensitive!
What is the approximate ERR for this project? Number
Should your company undertake this project? (Enter either 'Yes' or 'No'):
%
Projects A and B are mutually exclusive. The minimum attractive rate of return (MARR) is 12%.
Using rate of return analysis, which project should be selected?
If the image fails to load here, go to https://www.dropbox.com/s/ld6wctqieu8jgwp/ROR.jpg >>
Year
0
A
B
- $750
- $1,150
B-A
- $400
123
$200
$300
$100
$200
$350
$150
$200
$400
$200
4
$600
$700
$100
ROR
17.68%
16.44%
13.69%
Project A
Project B
Both Project A and B
Select none of the project.
Insufficient information to make a decision.
Suppose Omni Consumer Products's CFO is evaluating a project with the following cash
inflows. She does not know the project's initial cost; however, she does know that the
project's regular payback period is 2.5 years.
Year Cash Flow
Year 1 $350,000
Year 2 $400,000
Year 3 $475,000
Year 4 $475,00
If the project's weighted average cost of capital (WACC) is 9%, what is its NPV?
$373,562
$336,206
$317,528
$429,596
Chapter 7 Solutions
EBK CONTEMPORARY ENGINEERING ECONOMICS
Ch. 7 - Prob. 1PCh. 7 - Prob. 2PCh. 7 - Prob. 3PCh. 7 - Prob. 4PCh. 7 - Prob. 5PCh. 7 - Prob. 6PCh. 7 - Prob. 7PCh. 7 - Prob. 8PCh. 7 - Prob. 9PCh. 7 - Prob. 10P
Ch. 7 - Prob. 11PCh. 7 - Prob. 12PCh. 7 - Prob. 13PCh. 7 - Prob. 14PCh. 7 - Consider an investment project with the cash flows...Ch. 7 - Consider the investment projects given in Table...Ch. 7 - Prob. 17PCh. 7 - Prob. 18PCh. 7 - Consider the investment projects given in Table...Ch. 7 - Consider the investment projects given in Table...Ch. 7 - Prob. 21PCh. 7 - Prob. 22PCh. 7 - Consider the investment projects given in Table...Ch. 7 - Prob. 24PCh. 7 - Prob. 25PCh. 7 - Prob. 26PCh. 7 - Prob. 27PCh. 7 - Prob. 28PCh. 7 - Prob. 29PCh. 7 - Prob. 30PCh. 7 - Prob. 31PCh. 7 - Prob. 32PCh. 7 - Prob. 33PCh. 7 - Prob. 34PCh. 7 - Prob. 35PCh. 7 - Prob. 36PCh. 7 - Prob. 37PCh. 7 - Prob. 38PCh. 7 - Prob. 39PCh. 7 - Prob. 40PCh. 7 - Prob. 41PCh. 7 - Prob. 42PCh. 7 - Consider the two mutually exclusive investment...Ch. 7 - You are considering two types of automobiles....Ch. 7 - Prob. 45PCh. 7 - Prob. 46PCh. 7 - Fulton National Hospital is reviewing ways of...Ch. 7 - Prob. 48PCh. 7 - Consider the investment projects given in Table...Ch. 7 - Prob. 50PCh. 7 - Prob. 51PCh. 7 - Prob. 52PCh. 7 - Prob. 53PCh. 7 - Prob. 54PCh. 7 - Prob. 55PCh. 7 - Prob. 56PCh. 7 - Prob. 57PCh. 7 - Prob. 1STCh. 7 - Prob. 2STCh. 7 - Prob. 3STCh. 7 - Prob. 4STCh. 7 - Prob. 5ST
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