PS 2 - Time Value of Money and MARR

# PS 2 - Time Value of Money and MARR - a Number of Good...

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IE 150 Problem Set 2 Time Value of Money and MARR Instructions:  Write/Type/Print your answers on yellow pad or bond paper (NO A4’s). Use a different sheet per  problem.  Use phrases  to describe what you are doing. Do not present it as just a series of equations and  numbers.  Label each step. Ex: “Step 1: Set-up the Total Revenue Equation”, “Step 4: Solve for the NPV”.  Box the final answers.  Use clear formatting: Indent at each step. Show your answers in just 1 column. (The problem set  will be read from top to bottom, and not top bottom diagonal right bottom.) Problems 1-3: Identification 1. What does MARR stand for?  Minimum Attractive Rate of Return 2. What are the factors that determine MARR? (there are 4 in the book)
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Unformatted text preview: a. Number of Good project available b. The amount of perceived risk c. Type of Organization involved d. The amount of money available 3. Which among the 4 factors is the “strongest”? (the most governing factor that will determine the MARR) a. Number of good projects available (you can’t be choosy with the projects available to you. You’ll just choose the maximum). Problem 4-5: 4. List 3 reasons why money has “Time Value”. a. Earning power of money b. Inflation c. Cost of having no money 5. Give a situation wherein money has no “Time Value”. a. When there is deflation OR b. Money is kept/not invested....
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## This note was uploaded on 10/05/2011 for the course IE 150 taught by Professor J3patino during the Spring '11 term at University of the Philippines Diliman.

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