Chap 7-3 - MultipleRatesofReturn Problem Lecture No. 7-3...

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   Contemporary Engineering Economics, 4 th   edition, © 2007 Multiple Rates of Return  Problem Lecture No. 7-3 Chapter 7 Contemporary Engineering Economics Copyright © 2006
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   Contemporary Engineering Economics, 4 th   edition, © 2007 Net Investment Test What it is : A process to determine whether or not a firm borrows money from a project during the investment period. How to test : A project is said to be a net investment when the project balances computed at the project’s i* values, PB( i *) n , are either less than or equal to zero throughout the life of the investment. Meaning : The investment is net in the sense that the firm does not overdraw on its return any point and hence is not indebted to the project
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 Contemporary Engineering Economics, 4 th   edition, © 2007 Pure Investment Definition : An investment in which a firm never borrows money from the project. How to Determine : If the project passes the net investment test, it is a pure investment. Relationship
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Chap 7-3 - MultipleRatesofReturn Problem Lecture No. 7-3...

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