Homework Assignment #4, Spring 08

Homework Assignment #4, Spring 08 - Project 1 has an...

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MIME 2600 – Engineering Economics Homework Assignment (20 points) Due on Wednesday, 4/9/08 Assume compounding interest . (20 points) Determine which mutually exclusive project with 5-year service lives would be the best alternative based on an MARR of 15%. You may use whichever method you prefer (Present Worth, Internal Rate of Return, Annual Equivalence, but be sure to show all work. Include 1) Cash Flow diagram, 2) Description of method chosen, and 3) All calculations.
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Unformatted text preview: Project 1 has an initial investment of $10,000 with revenues of $1500 in year 1, $2000 in years 2 and 3, and $3500 in years 4 and 5. The equipment has a salvage value of $1500 after year 5. Project 2 has an initial investment of $5,000 with revenues of $1700 in years 1 through 3, and $2500 in years 4 and 5. The equipment has a salvage value of $500 and requires maintenance fees of $200 per year. WHICH PROJECT IS BEST?...
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