Determine the rate of return for project

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Reference no: EM131615839

An engineer who works for JadaTech is pitching a project for a new machine to his management. JadaTech’s MARR is 12%. To finance this project, JadaTech would have to invest $15,000 immediately and then $2000 each year for the next five years starting one year from now. The project is expected to generate revenue of $7000 one year from now, and then the revenue would increase by $1000 each year through year 4. The revenue in year 5 would be $12,000.

a. Determine the rate of return for this project.

b. Considering the rate of return that the company normally earns on their investments, should JadaTech invest in this project. Explain why or why not.

Please, solve the problem step by step.

Reference no: EM131615839

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