Quiz9_Spring08

Quiz9_Spring08 - T> 2.. :rz ~ \-N ~ V ~ Q ~ L :...

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CREE 5369/6369 Quiz # 9 (closed book) Tuesday March 25, 2008 A chemical compan y is considering two processes for isolating D N A material . The incremental cash flow between the two alternati v es A and B is as shown below. The company uses a MARR _ of 29 . ° ~ er ~ r and the project life is 3 y tars for either choice. The incremental DCFRR for the cash flow shown is actually less than 20% per year. The company CEO, however, prefers the more expensive process. The CEO believes she can negotiate the initial cost of the more expensive process (B) downward. By how much would she have to reduce the first cost of process (B) for it to have an incrementalDFCRR of exactly 20%?
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