the nonconventional bet cash fnow series shown, the external rate of retum per year using the MIRR method, vith an investment rat borrowing rate of 8% per year, is closest to: Year 1 3. NCF, S -40,000 +16,673 -29,000 +25,000 +53,798
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- Harley worked for many years to save enough money to start his own residential landscape design business. The net cash flows shown are those he recorded for the first 6 years as his own boss. Find the external rate of return using the modified rate of return approach with a reinvestment rate of 15% per year and a borrowing rate of 8%. Additionally, after using the procedure, use the MIRR function to confirm your answer.Why do most of the engineers and financial managers prefer rate-of-return analysis to the PW method?The Texas Department of Transportation (TxDOT) is considering two designs for crash barriers along a reconstructed portion of I-10. Design 2B will cost $3 million to install and $128,500 per year to maintain. Design 4R will cost $3.7 million to install and $55,000 per year to maintain. Determine which design should be selected based on a rate of return analysis if TxDOT uses a MARR of 6% per year and a 20-year project period. The rate of return is %. Design is selected. 4R OR 2B
- A secondary road in a developing country, 20 km long is to be improved by surface treating the gravel surface without any change in length. The cost of improvement is estimated at $150,000 per km (specifically, $80,000 per km at the beginning of year 1 and $70,000 per km at the beginning of year 2). Present annual transport costs (vehicle operating costs and maintenance costs, etc.) for all traffic on the existing road is estimated at $210,000 per km per annum. During the 2-year treatment, all traffic need to detour. The detour may cause a higher network-wide cost (transport cost and management cost) which is estimated to be $7,500,000 per annum in total. After improvement, this is expected to reduce to $150,000 per km per annum. If Minimum Attractive Rate of Return is 8% and project life is 20 years after reconstruction with zero salvage value. Resurfacing will be required 10 years after reconstruction at a costs of 50,000 per km. Use the B/C ratio method to determine whether the…Another name for noneconomic attributes is: (a) Sustainability (b) Intangible factors (c) Equivalence (d ) Evaluation criteriaEquipment needed at Valero Corporation refinery for the conversion of corn stock toethanol, a cleaner burning gasoline additive, will cost $175,000 and have net cashflows of $35,000 the first year, increasing by $10,000 per year over the life of 5 years.Develop a spreadsheet chart that plots AW vs interest rate to show where (what interestrate) the project switches from financially justified to unjustified. Use AW as the verticalaxis of the chart, and interest (i) as the horizontal axis of the chart. Use a range ofinterest rates spanning from 10% to 20%, and use increments of 1%. Label both axesand use a title for the chart.
- In order to provide drinking water as part of its 50-year plan, a west coast city is considering constructing a pipeline for importing water from a nearby community that has a plentiful supply of brackish ground water. A full-sized pipeline can be constructed at a cost of $122 million now. Alternatively, a smaller pipeline can be constructed now for $80 million and enlarged 20 years from now for another $100 million. The pumping cost will be $25,000 per year higher for the smaller pipeline during the first 20 years, but will be approximately the same thereafter. Both pipelines are expected to have the same useful life with no salvage value. (a) At an interest rate of 6% per year, which alternative is more economical? (b) Write the spreadsheet function to display the PW for the smaller pipeline alternative.The Texas Department of Transportation (TxDOT) is considering two designs for crash barriers along a reconstructed portion of I-10. Design 2B will cost $3 million to install and $125,500 per year to maintain. Design 4R will cost $3.7 million to install and $55,000 per year to maintain. Determine which design should be selected based on a rate of return analysis if TxDOT uses a MARR of 6% per year and a 20-year project period. The rate of return is Not attempted ______%.In order to provide drinking water as part of its 50-year plan, a west coast city is considering constructing a pipeline for importing water from a nearby community that has a plentiful supply of brackish ground water. A full-sized pipeline can be constructed at a cost of $125 million now. Alternatively, a smaller pipeline can be constructed now for $85 million and enlarged 20 years from now for another $90 million. The pumping cost will be $25,000 per year higher for the smaller pipeline during the first 20 years, but it will be approximately the same thereafter. Both pipelines are expected to have the same useful life with no salvage value At an interest rate of 11% per year The present worth of the full-sized pipeline is determined to be what and that of the small-sized pipeline is what Which pipeline is the most economical pipeline
- The U.S. Army received two proposals for a turnkey design/build project for barracks for infantry unit soldiers in training. Proposal A involves an off-the-shelf “bare-bones” design and standard grade construction of walls, windows, doors, and other features. With this option, heating and cooling costs will be greater, maintenance costs will be higher, and replacement will occur earlier than proposal B. The initial cost for A will be $750,000. Heating and cooling costs will average $6000 per month with maintenance costs averaging $2000 per month. Minor remodeling will be required in years 5, 10, and 15 at a cost of $150,000 each time in order to render the units usable for 20 years. They will have no salvage value. Proposal B will include tailored design and construction costs of $1.1 million initially with estimated heating and cooling costs of $3000 per month and maintenance costs of $1000 per month. There will be no salvage value at the end of the 20-year life. Which proposal should…The capital fund for new investment at Systems Corporation is limited to $75,000 for next year. You have been asked to recommend one or more of three projects as economically acceptable for investment at the corporate MARR of 15% per year. Perform the analysis in two ways: (a) by hand, and (b) using NPV functions and a spreadsheet. Initial Annual NCF, Life, Salvage Project Investment, $ $/Year Years Value, $ A −25,000 6,000 4 4,000 B −30,000 9,000 4 −1,000 C −50,000 15,000 4 20,000Which is the most efficient analysis method we can use for determining project acceptability on an economic basis?