Chap 7-2 - RateofReturn Lecture No 7-2 Chapter 7...

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   Contemporary Engineering Economics, 4 th   edition,  ©  2007 Methods for Finding the  Rate of Return Lecture No. 7-2 Chapter 7 Contemporary Engineering Economics Copyright © 2006
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   Contemporary Engineering Economics, 4 th   edition,  ©  2007 Simple versus Nonsimple Investments Simple Investment : The project with only one sign change in the net cash flow Nonsimple investment : an investment in which more than one sign change occurs in the net cash flow series
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   Contemporary Engineering Economics, 4 th   edition,  ©  2007 Example 7.1 Investment  Classification Period n Net Cash Flow Project A Project B Project C 0 1 2 3 4 -1,000 -500 800 1,500 2,000 -1,000 3,900 -5,030 2,145 1,000 -450 -450 -450 Project A: a simple investment Project B: a nonsimple investment Project C: a simple borrowing
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   Contemporary Engineering Economics, 4 th   edition,  ©  2007 Predicting Multiple  i *s Net Cash Flow Rule of Signs The number of real i*s that are greater than -100% for a project with N periods is never greater than the number of sign changes in the sequence of the cash flows. A zero cash flow is ignored.
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