1. Five projects form the mutually exclusive, collectively exhaustive set under consideration. The cash flow profiles...

 

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1. Five projects form the mutually exclusive, collectively exhaustive set under consideration. The cash flow profiles for the five projects are given in the table below. Life Null A B D 10years 10years 10years 10years 10years SO $670,000 $870,000 $480,000 $560,000 Initial investment Salvage Valve SO Annual revenue SO Annual expense S0 $23,683 $130,000 $95,000 $120,000 $470,000 $660,000 $280,000 $350,000 $150,000 $290,000 $23,683 $120,000 Set MARR= 9% and refinance rate = 11%. a) Based on an internal rate of return analysis, which alternative (if any) should be implemented? b) Plot cumulative cash flow series and interpret Nordstrom's criterion. c) Based on an external rate of return analysis, which alternative (if any) should be implemented? d) Based on a modified internal rate of return analysis, which alternative (if any) should be implemented? 1. Five projects form the mutually exclusive, collectively exhaustive set under consideration. The cash flow profiles for the five projects are given in the table below. Life Null A B D 10years 10years 10years 10years 10years SO $670,000 $870,000 $480,000 $560,000 Initial investment Salvage Valve SO Annual revenue SO Annual expense S0 $23,683 $130,000 $95,000 $120,000 $470,000 $660,000 $280,000 $350,000 $150,000 $290,000 $23,683 $120,000 Set MARR= 9% and refinance rate = 11%. a) Based on an internal rate of return analysis, which alternative (if any) should be implemented? b) Plot cumulative cash flow series and interpret Nordstrom's criterion. c) Based on an external rate of return analysis, which alternative (if any) should be implemented? d) Based on a modified internal rate of return analysis, which alternative (if any) should be implemented?

Answer rating: 100% (QA)

a To determine which alternative should be implemented based on internal rate of return IRR analysis we need to calculate the IRR for each project and ... View the full answer