ceve322spring2009firstmidsolution

ceve322spring2009firstmidsolution - 1) Year A B C D E B-A

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Unformatted text preview: 1) Year A B C D E B-A D-A-50-75-125-300-400-25-250 1 5 20 10 100 75 15 95 2 10 20 20 100 150 10 90 3 15 20 30 100 225 5 85 4 20 20 40 100 80 5 25 20 50-5-25 IRR: 12% 10% 5% 13% 5% 0% 13% 1a) than double A's. That makes it obvious that A's IRR will be better than C's, so it will be eliminated since the projects are mutually exclusive. The fact that the cash flows are exactly doubles eliminates any doubt about if the time value of money will play a role. 1b) 1c) returns 13% (> the 10% MARR) on the additional investment on top of A. B returned 0% on the additional investment, C may be readily eliminated from consideration because its cash flows are all simply double A's, but its initial investment is MORE Based on the IRRs above, A,B, and D are acceptable projects since their IRRs meet our MARR of 10% Using the IRR of the difference between acceptable projects of increasing initial investment, D is the best choice since it 2) Office Dep Machine Dep a) Year Rate Depreciation Year MACRS Rate...
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This note was uploaded on 03/11/2010 for the course CEVE 322 taught by Professor Segner during the Spring '10 term at Rice.

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ceve322spring2009firstmidsolution - 1) Year A B C D E B-A

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