Principles of Engineering Economic Analysis
6th Edition
ISBN: 9781118163832
Author: John A. White, Kenneth E. Case, David B. Pratt
Publisher: Wiley, John & Sons, Incorporated
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Chapter 8, Problem 2FE
To determine
Find the selection of the project.
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(c) If A and B are mutually exclusive projects, which project would you select based on the rate of return on incremental
investment at MARR = 10%?
The rate of return on the incremental investment is
%. (Round to one decimal place.)
Which project would you select based on the rate of return on incremental investment at MARR = 10%? Choose the
correct answer below.
Project A
O Project B
1: More Info
FOT23
n
0
1
Net Cash Flow
Project A
- $145,000
35,000
35,000
140,000
Project B
- $130,000
25,000
25,000
150,000
Would you undertake the following investment project? Why or why not? Be careful interest rate is not given!
Year 0 Year 1 Year 2 Year 3
costs $3,993 $4,840 $3,630 $0
revenues $0 $3,630 $4,840 $3,993
What does the capitalized cost represent?
Chapter 8 Solutions
Principles of Engineering Economic Analysis
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- You may purchase 100 shares of Mun Tee ltd on a 55 percent margin when the shares are selling at K20 each. The Lusaka stock exchange broke charges you 10 percent annual interest,and commission are 3 percent of total stock value on both the purchase and the sale. If a year later you receive a K0.50 per share dividend and sell the stock for K27. What's your rate of return on investment?arrow_forwardHow can we consider two investment projects with the different cash flow transactions?arrow_forwardA toll road has a capital cost of $30 million and an annual maintenance and operation cost of $3 million. The useful life is 30 years. The tolls yield $6 million per year, of which 20% is used for the cost of collection. What is the rate of return on the initial investment?arrow_forward
- A labor saving device system save $2,000 per year for five (5) years. It can be installed at a cost of $8,000. The rate of return on this planned investment is most nearly: a. = 12.36% b. = 9.36% c. 10% d. i = 8%arrow_forwardApply the procedures to find the true IRR or return on invested capital of mixed investment?arrow_forwardWhat does the capital-recovery ( CR ) cost mean?arrow_forward
- The following cash flows result from a potential construction project for your company: 1. Receipts of $565,000 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. A 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 5 Should your company undertake this project? (Enter either 'Yes' or 'No'): 198 团arrow_forwardAll else being constant, if estimated future cash flows increase, the internal rate of return will (decrease. change in an indeterminate way. remain the same. increase.arrow_forwardExplain three elements of project cash flows?arrow_forward
- What is the i*% for the given project? (Round answers to the third number after the decimal) Cash Flow 0 ($7,000) 1 $3,600 2 $2,900 3 $0 4 $1,300 5 $500arrow_forwardI want you to make a cash flow diagram on the given problem below. Only the Cash Flow Diagram (CFD), i am not asking you to solve it.arrow_forwardWhat does the term engineering economic decision refer to in all investment decisions relating to an engineering project?arrow_forward
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