A rolled model product company purchased a machine for ram clambering large I- b

Question

A rolled model product company purchased a machine for ram clambering large I- beam. The company expects to bend 95 beam at $2000 per beam in each of the first year, after which company expects to bend 125 beams per year through 9 years. If the company's MARR is 20% per year, what is the peresent worth of the expected income? A rolled model product company purchased a machine for ram clambering large I- beam. The company expects to bend 95 beam at $2000 per beam in each of the first year, after which company expects to bend 125 beams per year through 9 years. If the company's MARR is 20% per year, what is the peresent worth of the expected income?

Explanation / Answer

First We have to understand what is MARR- In business and engineering the minimum acceptable rate of return often abbreviated MARR.Company is willing to accept MARR before starting a project,giving its risk and opportunity cost of forgoing other projects ,It is also called minimum attractive rate of return.

it is also used as a term -Cutoff rate,bench mark and cost of capital. It is used to conduct premiminary analysis of proposed projects , and generally increase with increase risk.

A project manager will start a new project if the MARR exceeds the current return of other projects.

The MARR is based on the present value of return on investment and a series of future payments,known as negative value, and income reffered to as possitive value.

If company's MARR is 20% per year, his required Minimum return should be atleast 25% .

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