A project is being planned that has an initial investment at time 0, annual revenues and expenses,
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A project is being planned that has an initial investment at time 0, annual revenues and expenses, and a salvage value at the end of the project lifespan (20 years). The financial values are summarized below:
Initial investment amount at time 0 $150,000
Estimated annual revenue $34,500 per year
Estimated annual expenses $8,700 per year
Estimated salvage value at end of lifespan $10,000.
Minimum attractive rate of return (MARR) 15%
b. Using the annual worth (AW) method, determine whether purchasing the equipment is economically justified.
c. Repeat part (a) using the internal rate of return (IRR) method based on annual worth (AW).
Related Book For
Fundamentals of Financial Management
ISBN: 978-0324597707
12th edition
Authors: Eugene F. Brigham, Joel F. Houston
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