Chap 7-4 - InternalRateofReturn Criterion Lecture No. 7-4...

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   Contemporary Engineering Economics, 4 th   edition, © 2007 Internal Rate of Return  Criterion Lecture No. 7-4 Chapter 7 Contemporary Engineering Economics Copyright © 2006
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   Contemporary Engineering Economics, 4 th   edition, © 2007 Decision Rule for Pure Investment Decision Criterion for a Single Project : If IRR > MARR, accept the project. If IRR = MARR, remain indifferent. If IRR < MARR, reject the project. Decision Criterion for Mutually Exclusive Projects : Use the incremental analysis (See Lecture No. 28)
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   Contemporary Engineering Economics, 4 th   edition, © 2007 Example 7.7 Investment Decision for a  Pure Investment
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   Contemporary Engineering Economics, 4 th   edition, © 2007 Solution: ( 29 ( 29 * = $1,250,000 +$731,500 , , 15 $80,000( / , ,15) =0 58.71% Since * > MARR(18%), accept the investment. PW i P A i P F i i i - + =
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   Contemporary Engineering Economics, 4 th   edition, © 2007 Decision Rule for Mixed Investments
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This note was uploaded on 12/06/2010 for the course IE 305 taught by Professor Wang during the Spring '08 term at Iowa State.

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Chap 7-4 - InternalRateofReturn Criterion Lecture No. 7-4...

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