CR18248000 43000AP185 4300001873299 Sheet2 Sheet3 Sheet1 Sami Almalki TECH 452

Cr18248000 43000ap185 4300001873299 sheet2 sheet3

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CR(18%)=($248,000 - $43,000)(A/P,18%,5)+ $43,000(0.18)=$73,299 Sheet2
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Sheet3 Sheet1 Sami Almalki TECH 452 Economics Engineering NOV - 19 - 2012 Problem 7.4
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Assume that you are going to buy a new car for $25,000.You will be able to make a down payment of $3,000.The remaining $22,000 will be financed by the dwaler.The dealer computes your monthlypayment to be $547.47 for48 months of financing. What is the dealer's annual rate of return on this car loan? $22,000=$547.47(P/A,I,48) i=0.75% r=0.75*12=9%
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i=(1+i)^-1 i=(1+0.0075)^12 - 1=9.38% per year Problem 7.11 Consider four projects with the following sequences of cash flows Net Cash Flow N Project A
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ProjectB ProjectC ProjectD 0 ($25,000) ($23,000) $43,233 ($56,600) 1 $12,000 $32,000 ($18,000)
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($2,500) 2 $23,000 $32,000 ($18,000) ($6,459) 3 $34,000 ($25,000) ($18,000) $88,345
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a) Identify all the simple investments. Simple investment: Project A,D project C Simple borrowing. b) Identify all the nonsimple investments Non- simple investment: Project B c) Comare the i* for each project using Exel. Project A: PW(I)=-$25,000+$12,000(P/F,I,1)+$$23,000(P/F,I,2)+ $34,000(P/F,I,3)=0
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i^=59.32% ProjectB: PW(I)=$23,000+$32,000(P/A,I,2)- $25,000(P/F,I,3)=0 I^=82.72% Project C: PW(I)=$43,233-$18,000(P/A,I,3)=0 I^=12% A=borrowing rate of return
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Project D: PW(I)= - $56,500 - $2,500(P/F,I,1) - $6,459(P/F,I,2)+ $88,345(P/F,I,3)=0 I^=11.37% d) Which projet has no rate of return? The answer could be project C on the grounds that its cash flowrepresent a loan not an investment. Problem 7.20 Consider the following project’s cash flows:
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N net cash flow 0 ($3,000) 1 $800 2 $900 3
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x Assume that the project's IRR is 10% (A) find the value of X PW(I)=P/F,I,N) PW(10%)= - $3,000+ $800(P/F,10%,1) + $9,000(P/F,10%,2)+ X (P/F,10%,3)=0 X= $2,035 (B) Is this porject acceptable at MARR=8%?
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Since IRR=8%, the project is acceptable. &A Page &P Sheet2 Sheet3
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