What is the irr for the project in problem

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1. Using the project cost structure calculations discussed in class, calculate the customer price for a project requiring the following:

Senior Engineer:                      $2000/week for 6 weeks

Junior Engineer:                      $1500/week for 12 weeks

Configuration Mgmt:              $900/week for 5 weeks

Test and Integration:               $700/week for 3 weeks

Overhead:                               75%

Other Direct Costs:                 $20,000

G&A:                                      25%

Profit:                                      7%

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2. Your team just completed the cost estimates for your project.  If accepted, you would need an initial investment of $200,000 in Research and Development.  There will be construction costs in the first year of $350,000.  Annual sales of $300,000 will begin in year 2 and continue through year 5.  Your annual operating costs will be $50,000 for each year you sell the product.  If the discount rate is 12%, what is the NPV for this project? Should you invest in this project based on the NPV?   

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3. What is the IRR for the project in problem #6?  If the Minimum Attractive Rate of Return (MARR) is 20%, would you recommend investing in this project?  Discuss any reasons that you might not invest in a project even if it exceeds the MARR.

Show your work for full credit!  (Suggestion: Copy/paste cells as an Excel object into Word.)

Reference no: EM131001689

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