Calculate the present worth on incremental investment

Assignment Help Econometrics

Reference no: EM13203428

The following cash flows represent two mutually exclusive investment alternatives:

Year A1 A2
0 -$18,000 -$23,500
1 10,000 15,000
2 9,000 13,500
3 9,000 13,500
4 9,000 13,500
5 9,000 16,500

a. Find the IRR (Internal Rate of Return) on the incremental cash flow. For an MARR (Minimal Acceptable Rate of Return) of 15%, which one would you select?
b. Calculate the present worth on total investment for MARR = 12%(Minimal Acceptable Rate of Return)
c. Calculate the present worth on incremental investment for the same MARR (Minimal Acceptable Rate of Return) and select the best alternative.

Reference no: EM13203428

Questions Cloud

Find all equilibria : Find all equilibria. Classify as stable, semi-stable, or unstable using phase diagrams for the equation.

Determine which route is most attractive : The state highway department is considering six routes for a new highway. Listed below are the estimated construction costs, maintenance costs, and the user cost associated with each route. Route Construction Costs Annual Maintenance Costs Annual U..

How many yards of rope will bruce need to purchase : Bruce needs 30 five-foot pieces of rope for a school project. The hardware store sells rope by the yard. How many yards of rope will Bruce need to purchase?

Determine an equation that models the circular ripple : Determine an equation that models the circular ripple 12 s after the stone is dropped.

Calculate the present worth on incremental investment : a. Find the IRR (Internal Rate of Return) on the incremental cash flow. For an MARR (Minimal Acceptable Rate of Return) of 15%, which one would you select b. Calculate the present worth on total investment for MARR = 12%(Minimal Acceptable Rate of ..

State how much time will pass before the train : A car left Shawnee at the same time traveling due east at 60 miles per hour. How much time will pass before the train and car are 405 miles apart?

Use linear approximation to estimate the maximum error : The circumference of a sphere was measured to be 84 .000 cm with a possible error of 0 .50000 cm. Use linear approximation to estimate the maximum error in the calculated surface area.

Process of retrieving information from long-term memory : What is the process of retrieving information from long-term memory done by assembling information from various brain locations?

Which alternative would it select for each of the cases : A needed service can be bought for $550 per unit. The same service can be provided by equipment that costs $225,000, has a salvage value of $75,000 at the end of 10 years and costs $21,500 annually plus $35 per unit to operate. a. What is the incr..

User Account

All Pages