Engineering Economy
Engineering Economy
16th Edition
ISBN: 9780133582819
Author: Sullivan
Publisher: DGTL BNCOM
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Chapter 11, Problem 5P

(a):

To determine

Calculate the breakeven investment.

(b):

To determine

Calculate the time period.

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You are faced with a decision on an investment proposal. Specifically, the estimated additional income from the investment is $125,000 per year; the investment cost is $400,000; and the first year estimated expense of $20,000 and will increase a rate of 5% per year. Assume an 8-year analysis period, no salvage value, and MARR = 15% per year. a. Calculate the PW and FW of this proposal?  b. What is the ERR ( Ԑ=MARR) of this proposal?  c. What is the Simple and Discounted payback?  include the cash flow diagram and conclusion
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