Consider the investment projects given in Table ST 15.3.
Suppose that you have only $3,500 available at period 0. Neither additional budgets nor borrowing is allowed in any future budget period. However, you can lend out any remaining funds (or available funds) at 10% interest per period.
Table ST 15.3

(a) If you want to maximize the future worth at period 3, which projects would you select? What is that future worth (the total amount available for lending at the end of period 3)? No partial projects are allowed.
(b) Suppose in part (a) that at period 0 you are allowed to borrow $500 at an interest rate of 13%. The loan has to be repaid at the end of year one. Which project would you select to maximize your future worth at period 3?
(c) Considering a lending rate of 10% and a borrowing rate of 13%, what would be the most reasonable MARR for project evaluation?

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Project Cash Flows -$2.000-$3.000-$1,000 4.000 1,400-$1,000 1,000 1.000 1,000 23.38% -100 1,090 33.33% 30.91 % 9%