Year A B 0 ($32,000) ($27,500) 1 $15,000 $17,000 2 $22,000 $16,500 3 $19,000 $15,000 The...

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Year A B 0 ($32,000) ($27,500) 1 $15,000 $17,000 2 $22,000 $16,500 3 $19,000 $15,000 The process equipment will run for 3 years. With a MARR of 8%, calculate the following: a) Calculate the Future Value at end of year (EOY) 3 for each option. (6 +6 points) DO NOT CALCULATE USING THE FINANCIAL FUNCTIONS IN EXCEL. b) Use try-and-error with linear interpolation to calculate IRR for each option. | i. Determine whether IRR is greater or less than 30% for each project. (4 +4 points) ii. Change the interest rate by 5% and calculate PW. Specifically, if IRR > 30%, then try 35%; if IRR <30%, then try 25%. Repeat this procedure until a sign change of PW. (2+2 points) iii. Find out IRR by linear interpolation. (3 + 3 points) Year A B 0 ($32,000) ($27,500) 1 $15,000 $17,000 2 $22,000 $16,500 3 $19,000 $15,000 The process equipment will run for 3 years. With a MARR of 8%, calculate the following: a) Calculate the Future Value at end of year (EOY) 3 for each option. (6 +6 points) DO NOT CALCULATE USING THE FINANCIAL FUNCTIONS IN EXCEL. b) Use try-and-error with linear interpolation to calculate IRR for each option. | i. Determine whether IRR is greater or less than 30% for each project. (4 +4 points) ii. Change the interest rate by 5% and calculate PW. Specifically, if IRR > 30%, then try 35%; if IRR <30%, then try 25%. Repeat this procedure until a sign change of PW. (2+2 points) iii. Find out IRR by linear interpolation. (3 + 3 points)

Answer rating: 100% (QA)

a To calculate the future value at the end of year 3 for each option we can use the formula FV CF1 1 r2 CF2 1 r CF3 Where FV Future value CF1 CF2 CF3 ... View the full answer