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me3232-F10-hw3

# me3232-F10-hw3 - ME 3232 Homework#3 Due October 6 2010 1...

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ME 3232 Homework #3, Due October 6, 2010 1. You are given the following financial data: Investment cost at n = 0: \$10,000 Investment cost at n = 1: \$15,000 Useful life: 10 years (after year 1) Salvage value (at the end of 11 years): \$5,000 Annual revenues: \$12,000 per year Annual expenses: \$4000 per year MARR: 10%. (Note: The first annual revenue and expenses will occur at the end of year 2.) Determine the project’s payback and discounted payback periods (ie with and without interest consideration). 2. Consider the following independent investment projects: Project Cash Flow n A B C D E 0 1 2 3 4 5 6 7 8 9 10 -\$100 60 900 -\$100 70 70 40 40 \$20 10 5 -180 60 50 40 30 20 10 -\$200 120 40 40 -20 40 30 -\$50 -100 -50 0 150 150 100 100 (a) Classify each project as either simple or non-simple. (b) Compute the i* for A using the quadratic equation. (c) Obtain the rate(s) of return for each project by plotting the PE as a function of interest rate.

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3. Consider an investment project with the following cash flows: n Cash Flow 0 1 2 3 -\$5000 0 4840 1331 If the MARR is 10%, what is your advice on the project?
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me3232-F10-hw3 - ME 3232 Homework#3 Due October 6 2010 1...

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