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Unformatted text preview: ECN801, V. Bardis Problem Set 6 1. (7.5) What rate of return per month will an entrepreneur make over a 2-year project period if he invested $150,000 to produce portable 12-volt air compressors? His estimated monthly costs are $27,000 with income of $33,000 per month. 2. (7.8) Barron Chemical uses a thermoplastic polymer to enhance the appearance of certain RV panels. The initial cost of one process was $130,000 with annual costs of $49,000 and revenues of $78,000 in year 1, increasing by $1000 per year. A salvage value of $23,000 was realized when the process was discontinued after 8 years. What rate of return did the company make on the process? 3. (7.9) A graduate of New Mexico State University who built a successful business wanted to start an endowment in her name that would provide scholarships to IE students. She wanted the scholarships to amount to $10,000 per year, and she wanted the first one to be given on the day she made the donation (i.e., at time 0). If she planned to donate $100,000, what rate of return would the university have to make (i....
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- Winter '11