The following cash flows result from a potential construction contract for Erstwhile Engineering. 1. Receipts of $500,000 at the start of the contract and $800,000 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 zero at the end of the third year. Using an appropriate rate of return method, for a MARR of 25 percent, should Erstwhile Engineering accept this project? Answer the following question: Erstwhile Engineering should/should not accept the project because the rate of return is (enter your response here) percent, which is less/greater than the MARR.
The following cash flows result from a potential construction contract for Erstwhile Engineering. 1. Receipts of $500,000 at the start of the contract and $800,000 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 zero at the end of the third year. Using an appropriate rate of return method, for a MARR of 25 percent, should Erstwhile Engineering accept this project? Answer the following question: Erstwhile Engineering should/should not accept the project because the rate of return is (enter your response here) percent, which is less/greater than the MARR.
Fundamentals Of Construction Estimating
4th Edition
ISBN:9781337399395
Author:Pratt, David J.
Publisher:Pratt, David J.
Chapter8: Pricing Generally
Section: Chapter Questions
Problem 5RQ
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The following cash flows result from a potential construction contract for Erstwhile Engineering.
1. Receipts of $500,000 at the start of the contract and $800,000 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.
and at the end of the second year of $900,000.
3. A net cash flow of zero at the end of the third year.
Using an appropriate rate of return method, for a MARR of 25 percent, should Erstwhile Engineering accept this project?
Answer the following question:
Erstwhile Engineering should/should not accept the project because the rate of return is (enter your response here) percent, which is less/greater than the MARR.
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