Evaluate the engineering project when the marr is given

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Reference no: EM13148258

1. An engineer borrowed $3,000 from a bank, payable in six equal end-of-year payments at a interest rate at 8%. The bank agreed to reduce the interest on the loan if interest rates are declined in the US before the loan was fully repaid. At the end of 3 year after the third payment, the bank agreed to reduce the interest rate on the remaining debt from 8% to 7%. A. What was the amount of the equal annual end-of-year payments for each of ?rst 3 years? B. What was the amount of the equal annual end-of-year for each of the last 3 years? 2. . A large electronic retailer is considering the purchase of software that will minimize shipping expenses in its supply chain network. This software, including installation and training, would be a $10 million investment for the retailer. If the ?rms effective interest rate is 15% per year and the life of the software is four year, what annual savings in shipping expenses mush there be to justify the purchase if the software? 3.Evaluate the following engineering project when the MARR is 15% per year. Is the project acceptable? Project A Investment cost $10,000. Expected life 5 years. Market Value -$1,000. Annual receipts $8000. Annual expenses $4000. a. Use Annual worth method(AW) to evaluate the project. b. Use IRR method to evaluate the project. c. Use ERR when the external reinvestment rate is 15%. 4. Your company is considering the introduction of a new product line. The initial investment required for this project is $500,000, and annual maintenance costs are anticipated to be $35,000. Annual operating costs will be directly proportional to the level of production at $7.50 per unit, and each unit of product can be sold for $50. If the MARR is 15% and the project has a life of ?ve years, what is the minimum annual production level for which this project is economically viable?

Reference no: EM13148258

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