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Quiz7_Spring08 - r B ~:~ = z N p C~(~\fIJ" r c ='6~T 1...

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CREE 5369/6369 Quiz # 7(Closed book) Tuesday March 4, 2008 An investigation of a proposed investment has been made. The following results have been presented to management: The payback period is2years. Depreciation is by straight-line method with 10 years recovery period and no salvage value. The fixed capital investment is 84% of total caQital investment . Using this information, determine: . p~p -; ; . . 2 . . ••rr5> . (\:1 0 S - .: :( ) C ~- It > Il(\ l r 0~\ J ~\ J ;; : , f J r l rI A I J 0 "10 I\ { ) ) 1 . What isthe rate ofreturn on the investment? 2. If MARR is exactly half the ROI you just calculated. What is the reference Payback period? 3. If interest rate is 10%, calculate the net present worth of this project as a
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