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A firm has an opportunity to invest $100,000 in a project that will result revenue of $30,000 per year 7 years. The maintenance would be $800O0 per year and salvage value is $32,000 at end of year 7. What would be rate of return? O=-100000+32000(P/F.i.7)+(30000-8000)* (P/A,i,7) solve for i either using interpolation of excel,

A firm has an opportunity to invest $100,000 in a project that will result revenue of $30,000 per year 7 years. The maintenance would be $800O0 per year and salvage value is $32,000 at end of year 7. What would be rate of return? O=-100000+32000(P/F.i.7)+(30000-8000)* (P/A,i,7) solve for i either using interpolation of excel,

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
Section: Chapter Questions
Problem 22E
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Question 1 A firm has an opportunity to invest $100,000 in a project that will result revenue of $30,000 per year 7 years. The maintenance would be $8000 per year and salvage value is $32,000 at end of year 7. What would be rate of return? O=-100000+32000*(P/F,i.7)+(30000-8000)* (P/A,i,7) solve for i either using interpolation of excel, start with 10%, 25% and check. O 17.46% O 15.46% 19.46% O 13.46%
Transcribed Image Text:Question 1 A firm has an opportunity to invest $100,000 in a project that will result revenue of $30,000 per year 7 years. The maintenance would be $8000 per year and salvage value is $32,000 at end of year 7. What would be rate of return? O=-100000+32000*(P/F,i.7)+(30000-8000)* (P/A,i,7) solve for i either using interpolation of excel, start with 10%, 25% and check. O 17.46% O 15.46% 19.46% O 13.46%
D Question 2 Solve question 1 using equivalent uniform annual worth. So: 0=-$100000*(A/P,i,7)+$22000+$32000* (A/P,i,7) find i. O 16.04% O 17.04% O 19.04% O 13.04%
Transcribed Image Text:D Question 2 Solve question 1 using equivalent uniform annual worth. So: 0=-$100000*(A/P,i,7)+$22000+$32000* (A/P,i,7) find i. O 16.04% O 17.04% O 19.04% O 13.04%
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