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problemset006

# problemset006 - ECN801 V Bardis Problem Set 6 1(7.5 What...

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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 2½-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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