A rolled metal product company purchased a new machine for ram cambering large I
ID: 1199684 • Letter: A
Question
A rolled metal product company purchased a new machine for ram cambering large I- beam. The company expects to bend 95 beams at 2000 $ per beam in each of the first 3 years, after which company expects to bend 125 beams per year through year 9. If the company's MARR is 20% per year, what is the peresent worth of the expected income? A rolled metal product company purchased a new machine for ram cambering large I- beam. The company expects to bend 95 beams at 2000 $ per beam in each of the first 3 years, after which company expects to bend 125 beams per year through year 9. 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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