1. 1 ) Given a MARR of 17%, would you accept the following investments based on
ID: 1173284 • Letter: 1
Question
1. 1 )Given a MARR of 17%, would you accept the following investments based on the information given?
Investment
Criteria
Accept/Reject/Indifferent
A
PW(17%)= $89.13
B
IRR = 12%
C
AE (17%) = -$23
2. 2) Consider the following project cash flows. Fill in the table and determine which are simple and which are nonsimple investments.
N
Project A
Cash Inflow
Cash Outflow
Net Cash Flow
0
0
$22,000
1
$15,000
$5,000
2
$30,000
$10,000
3
$32,000
$2,000
N
Project B
Cash Inflow
Cash Outflow
Net Cash Flow
0
0
$56,500
1
$2,500
$5,000
2
$1,000
$7,459
3
$90,345
$2,000
Investment
Criteria
Accept/Reject/Indifferent
A
PW(17%)= $89.13
B
IRR = 12%
C
AE (17%) = -$23
Explanation / Answer
1. I
A
PW(17%)= $89.13 - Accept
B
IRR = 12% - Reject
CSingle Project Evaluation:
?
If AE(i) > 0, accept the investment.
?
If AE(i) = 0, remain indifferent to the investment
?
If AE(i) < 0, reject the investment
AE (17%) = -$23 - Reject
Project A Cash Inflow Cash Outflow Net Cash Flow 0 0 22000 -22000 1 15000 5000 10000 2 30000 10000 20000 3 32000 2000 30000Related Questions
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