Quiz7_Spring08 - r B ~-::~ = z .. N p C~ (~ : +(} ' \fIJ \...

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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 is 2 years. 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 is the rate of return 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 multiple of the total capital investment.
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