IE 343 Fall 2009
Name: _______________________
Student ID: ___________________
IE 343 Midterm 2.
Makeup exam
Closed Book, Closed Notes
Show all of your work
.
Your work and answers must be shown on the pages provided.
Write your name and student ID in the spaces provided above.
For
problems 4 and 5,
note that no interest tables are required; you are to carry your
answer to the point where the equation for each problem is specified –e.g.,
“1,000(A/P, 10%, 5) + 1,500 + 200(A/F, 10%, 5)”
and stop here. Your grade on this problem will be based on the correctness of the
equation and the clarity of your work leading up to the equation.
For
problems 1, 2, 3 and 6
, interest tables may be used and are provided for you to
perform your calculations.
1
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IE 343 Fall 2009
Name: _______________________
Student ID: ___________________
1.
A firm is considering investing in a machine that has an initial cost of $36,000.
For a period of 10 years, operating and maintenance costs are expected to be
$4,000 a year while estimated annual revenues are expected to be $10,000 a year.
At the end of 10 years, the machine has a salvage value of $5,000. The firm’s
MARR is 10% a year.
a)
Determine the simple payback period for this investment.
6 points
Annual net revenue = $6,000
θ
= 6
years
b)
What is your recommendation for this project using the IRR method?
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 Spring '08
 Vincent,G
 Depreciation, Revenue, Progressive Tax, Taxation in the United States, student id

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