Basics Of Engineering Economy
Basics Of Engineering Economy
2nd Edition
ISBN: 9780073376356
Author: Leland Blank, Anthony Tarquin
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 6, Problem 21P
To determine

Calculate the rate of return.

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A small business purchased now for P50,000 will lose P9,600 each year for the first four years. An additional investment of P30,000 in the business wil required at the end of the fifth year. After 15 years the business can be sold for P70,000. What should be the profit each year from the sixth through the fifteenth year to obtain a rate of return of 25%?
The Iligan Light & Power Inc. estimates that the present worth now of increased revenue from an investment in renewable energy sources is P12,475,000. There will be no new revenue in years 1 or 2, but in year 3 revenue will be P250,000, and thereafter it will increase according to an arithmetic gradient through year 15. What is the required gradient, if the expected rate of return is 15% per year?
The following cash flows result from a potential construction project for your company: Receipts of $545,000 at the start of the contract and $1,200,000 at the end of the fourth year Expenditures at the end of the first year of $400,000 and at the end of the second year of $900,000 A net cash flow of $0 at the end of the third year. Using an appropriate rate of return method (Approximate ERR), for a MARR of 20%, should your company accept this project (Perform all calculations using 5 significant figures and round your answer to one decimal place. ) What is the approximate ERR for this project?    % Should your company undertake this project?

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Basics Of Engineering Economy

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