Give typing answer with explanation and conclusion A small company purchased now for $120,000 will lose $300 each year for the first four years. An additional $600 in the company in the fourth year will result in a profit of $9500 each year from the fifth through the twelfth year. At the end of 12 years, the company can be sold for $135,000. a) Draw the cash flow diagram b) Determine the IRR for this project. c) Calculate the FW if MARR is 5%. d) Calculate the ERR when ε = 7%

Give typing answer with explanation and conclusion A small company purchased now for $120,000 will lose $300 each year for the first four years. An additional $600 in the company in the fourth year will result in a profit of $9500 each year from the fifth through the twelfth year. At the end of 12 years, the company can be sold for $135,000. a) Draw the cash flow diagram b) Determine the IRR for this project. c) Calculate the FW if MARR is 5%. d) Calculate the ERR when ε = 7%

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter8: Cost Analysis

Section: Chapter Questions

Problem 3E

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