Assignment Oct 13 to Oct 22, 2009
Tuesday, 10/13/09:
7.34
B.
choose
Therefore
15%
%
11
.
28
=

A
B
i
7.35
i
A2A1
= 29.92%
> 10%
Therefore choose A
2
Thursday, 10/15/09:
Consider the following project cash flows:
n
A
n
0
$ 420k
1
+180k
2
+180k
3
+180k
The MARR is 12 % per year.
a)
Find the IRR (internal rate of return)
b)
Find the ERR (external rate of return)
c)
Is the project acceptable?
IRR = 13.72%
ERR = 13.1%
Yes
7.17
For project C use the ERR (external rate of return procedure covered in class
rather than the more complicated procedure shown in example 7.9 of Park’s text.)
b) C mixed
c) A and B were given;
C: ERR ≈ 12.1%
d) All 3 projects acceptable
Note:
For project C we get 12.24% per Park’s procedure. See example 7.9.
You will not
be held responsible for Park’s procedure.
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View Full DocumentTuesday, 10/20/09
9.3
$1,591,500
9.8
n
Dn
Bn
Dn if switch to SL
0
0
50,000
0
1
14,286
35,714
7,143
2
10,204
25,510
5,952
3
7,288
18,222
5,102
4
5,207
13,015
4,556
5
4,338
8,677
4,338
6
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 Fall '08
 Pore
 Depreciation, Internal rate of return

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