1. This represents a 10% per year rate of return on the unrecovered balance. Compute the...

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1. This represents a 10% per year rate of return on the unrecovered balance. Compute the amount of the unrecovered investment for each of the 4 years using (a) the rate of return on the unrecovered balance (the correct basis) and (b) the return on the initial $1000 investment. (c) Explain why all of the initial $1000 amount is not recovered by the final payment in part (b) (1) (2) (3)=0.10x2 (4) (5)=(4)-(3) (6)=(2)+(5) Beginning Interest on Ending Unrecovered Unrecovered Recovered Balance balance Cash flow Amount Unrecovered balance 0 1 2 3 4 (1) (2) (3)=0.10x2 (4) (5)=(4)-(3) Beginning Interest on Unrecovered initial Balance amount Cash flow Recovered Amount 0 1 2 3 4 (6)=(2)+(5) Ending Unrecovered balance 2. For a given cash flow, manually calculate MARR in using Trial and Error method $1500 $1000 2 $500 i = ? 4 5 3. Applications of green, lean manufacturing techniques coupled with value stream mapping can make large financial differences over future years while placing greater emphasis on environmental factors. Engineers with Monarch Paints have recommended to management an investment of $200,000 now in novel methods that will reduce the amount of wastewater, packaging materials, and other solid waste in their consumer paint manufacturing facility. Estimated savings are $15,000 per year for each of the next 10 years and an additional savings of $300,000 at the end of 10 years in facility and equipment upgrade costs. Determine the rate of return using hand and spreadsheet solutions. f = ? $300,000 $15,000 0 2 4 5 6 7 8 9 10 $200,000 4. An Aluminum Company operates a bauxite mine to supply its aluminum smelter located about 2 km from the current open pit. A new branch for the pit is proposed that will supply an additional 10% of the bauxite currently available over the next 10-year period. The lease for the land will cost $400,000 immediately. The contract calls for the restoration of the land and development as part of a state park and wildlife area at the end of the 10 years. This is expected to cost $300,000. The increased production capacity is estimated to net an additional $75,000 per year for the company. Perform an ROR analysis that will provide the following information: (a) Type of cash flow series and possible number of ROR values (b) PW graph showing all i* values (c) Actual i* values determined using the ROR relation and spreadsheet function (d) Conclusions that can be drawn about the correct rate of return from this analysis Students need to follow the lecture example and construct the Excel file. 1. This represents a 10% per year rate of return on the unrecovered balance. Compute the amount of the unrecovered investment for each of the 4 years using (a) the rate of return on the unrecovered balance (the correct basis) and (b) the return on the initial $1000 investment. (c) Explain why all of the initial $1000 amount is not recovered by the final payment in part (b) (1) (2) (3)=0.10x2 (4) (5)=(4)-(3) (6)=(2)+(5) Beginning Interest on Ending Unrecovered Unrecovered Recovered Balance balance Cash flow Amount Unrecovered balance 0 1 2 3 4 (1) (2) (3)=0.10x2 (4) (5)=(4)-(3) Beginning Interest on Unrecovered initial Balance amount Cash flow Recovered Amount 0 1 2 3 4 (6)=(2)+(5) Ending Unrecovered balance 2. For a given cash flow, manually calculate MARR in using Trial and Error method $1500 $1000 2 $500 i = ? 4 5 3. Applications of green, lean manufacturing techniques coupled with value stream mapping can make large financial differences over future years while placing greater emphasis on environmental factors. Engineers with Monarch Paints have recommended to management an investment of $200,000 now in novel methods that will reduce the amount of wastewater, packaging materials, and other solid waste in their consumer paint manufacturing facility. Estimated savings are $15,000 per year for each of the next 10 years and an additional savings of $300,000 at the end of 10 years in facility and equipment upgrade costs. Determine the rate of return using hand and spreadsheet solutions. f = ? $300,000 $15,000 0 2 4 5 6 7 8 9 10 $200,000 4. An Aluminum Company operates a bauxite mine to supply its aluminum smelter located about 2 km from the current open pit. A new branch for the pit is proposed that will supply an additional 10% of the bauxite currently available over the next 10-year period. The lease for the land will cost $400,000 immediately. The contract calls for the restoration of the land and development as part of a state park and wildlife area at the end of the 10 years. This is expected to cost $300,000. The increased production capacity is estimated to net an additional $75,000 per year for the company. Perform an ROR analysis that will provide the following information: (a) Type of cash flow series and possible number of ROR values (b) PW graph showing all i* values (c) Actual i* values determined using the ROR relation and spreadsheet function (d) Conclusions that can be drawn about the correct rate of return from this analysis Students need to follow the lecture example and construct the Excel file.