EBK CONTEMPORARY ENGINEERING ECONOMICS
EBK CONTEMPORARY ENGINEERING ECONOMICS
6th Edition
ISBN: 9780134123950
Author: Park
Publisher: PEARSON CUSTOM PUB.(CONSIGNMENT)
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Chapter 7, Problem 40P

(a):

To determine

Calculate the incremental internal rate of return.

(b):

To determine

Selection of the project.

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Consider the two investments with the following sequences of cash flows Compute for i* for each investment What are the NPW of each alternatives with an MARR of 15% If A & B are mutually exclusive, which project is more economically desirable? (Incremental)
Suppose we have four mutually exclusive projects, D1, D2, D3, and D4, whose internal rates of return on incremental investment between the projects is given as follows:IRR (Dl - D2) = 27.62%IRR {Dl - D3) = 14.26%IRR {Dl - D4) = 25.24%IRR (D3 - D2) = 30.24%IRR (D2- D4) = 17.34%IRR (D3 - D4) = 16.14%Which project should be selected at MARR 15%?
You are considering a luxury apartment building project that requires an investment of $14,500,000. The building has 60 units. You expect the maintenance cost for the apartment building to be ​$450,000 the first year and ​$490,000 the second year. The maintenance cost will continue to increase by ​$40,000 in subsequent years. The cost to hire a manager for the building is estimated to be ​$100,000 per year. After five years of​ operation, the apartment building can be sold for ​$18,000,000. What is the annual rent per apartment unit that will provide a return on investment of 17​%? Assume that the building will remain fully occupied during its five years of operation. The annual rent per apartment unit should be ​$ ______thousand. ​(Round to one decimal​ place.).
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