Quiz9_Spring09 - the initial cost of the more expensive...

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CHEE 5369 / 6369 Quiz # 9 (closed book) Tu e sday march 31, 2009 A chemical company is considering two processes for isolating DNA material . The incremental cash fl o w between the two alternatives A and B is as shown below. The company uses a MARR of 20% per year and the project life is 3 years for either choice. The incremental DCFRR for the cash flow shown is actually less than 20% per year . The co mp a ny CEO, however, pr e fers the more expe _ llSiv e pro c ess. The CEO believes she can negotiate
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Unformatted text preview: the initial cost of the more expensive process (B) downward. By how m u ch would she have to reduce the first cost of process (B) for it to have an incremental DFCRR of exactly 20 % ? rJ-f' V-Year Incremental cash flow, $ (B-A) / year o-900,000 1-3 400,000 r w-s ) ~ I G " "" s + b ~ r A" ra c\ 6-:1 ~---_ . _-----------------------_ .-...
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This note was uploaded on 04/13/2011 for the course CHEE 5369 taught by Professor Alim during the Spring '11 term at University of Houston.

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