Determine MARR that maximizes FW

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Reference no: EM132003610

Julian Stewart invested $280,000 in a limited partnership to drill for natural gas. The investment yielded annual returns of $45,000 the 1st year, followed by $10,000 increases until the 6th year, at which time an additional $180,000 had to be invested for deeper drilling. Following the 2nd drilling, the annual returns decreased by $10,000 per year, from $85,000 to $5,000. Using Excel, the IRR = 15.28%.

a) Plot future worth as a function of MARR

b) Plot future worth as a function of MARR (MARR ranges from -50% to +50% increment by 5%)

c) Determine the MARR that maximizes FW

Use only Excel to solve and show your work in Excel. Answer each part of the question, else it be marked incomplete.

Reference no: EM132003610

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