EBK CONTEMPORARY ENGINEERING ECONOMICS
EBK CONTEMPORARY ENGINEERING ECONOMICS
6th Edition
ISBN: 8220101336736
Author: Park
Publisher: PEARSON
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Chapter 5, Problem 4P

Refer to Problem 5.2, and answer the following questions:

  1. (a) How long does it take to recover the investment?
  2. (b) If the firm’s interest rate is 15% after taxes, what would be the discounted payback period for this project?
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Determine the payback period for a proposed investment as follows
The government is considering undertaking one of the four projects A1, A2, A3, and A4. These projects are mutually exclusive, and the estimated present values of their costs and of their benefits are shown in millions of dollars as follows: All of the projects have the same duration. Assuming that there is no donothing alternative, which alternative would you select? Justify your choice by using a benefit-cost ratio on incremental investment (BC(i)).
Consider the following cash flow data for two competing investment projects: (a) At i = 12%, which of the two projects would be a better choice?{b)At i = 22%, which project is chosen by the NPW rule?
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Break Even Analysis (BEP); Author: Tutorials Point (India) Ltd.;https://www.youtube.com/watch?v=wOEkc3O_Q_Y;License: Standard YouTube License, CC-BY
Cost Volume Profit Analysis (CVP): calculating the Break Even Point; Author: Edspira;https://www.youtube.com/watch?v=Nw2IioaF6Lc;License: Standard Youtube License