Dawn is preparing a home office to perform subcontract projects for midsized architect firms. She plans...
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Dawn is preparing a home office to perform subcontract projects for midsized architect firms. She plans to use $14,000 of her own funds, which currently generate a return of 4% per year. The remainder of financing will be provided by a $13,000 bank loan carrying a 9% per year interest rate. She hopes to realize a return of 3% above the average cost of capital to establish her office, and she realizes that the factors of inflation and risk should also be considered. Her decision is to add another 2.5% per year to compensate for these elements. What is the MARR she should use when evaluating projects? The MARR she should use is %. Dawn is preparing a home office to perform subcontract projects for midsized architect firms. She plans to use $14,000 of her own funds, which currently generate a return of 4% per year. The remainder of financing will be provided by a $13,000 bank loan carrying a 9% per year interest rate. She hopes to realize a return of 3% above the average cost of capital to establish her office, and she realizes that the factors of inflation and risk should also be considered. Her decision is to add another 2.5% per year to compensate for these elements. What is the MARR she should use when evaluating projects? The MARR she should use is %.
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The MARR Minimum Acceptable Rate of Return that Dawn should use when evaluat... View the full answer
Related Book For
South-Western Federal Taxation 2018 Comprehensive
ISBN: 9781337386005
41st Edition
Authors: David M. Maloney, William H. Hoffman, Jr., William A. Raabe, James C. Young
Posted Date:
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