Determine the amount if 21 monthly payments. Compute the rate of return for a pr

Question

Determine the amount if 21 monthly payments. Compute the rate of return for a project that has an initial cost of $30,000 and would provide positive cash flows of $5,000 the first year, $6,000 the second year, $7,000 the third year, $8,000 the fourth year, $9,000 the fifth year, and $10,000 the sixth year. Tom promises to pay Joel $3,000 in three years and another $4,000 three years later for a loan of $5,000 from Joel today. What is the interest rate that Joel is getting? Assume the interest is compounded monthly. Northshore hospital in Nassau county area bought a diagnostic machine at a cost of $50,000. Maintenance cost is expected to remain constant throughout the life of this machine at $3,000 per year. The salvage value is estimated to be "0" at the end of the useful life of 12 years. Determine the economic life (minimum cost life) of this machine. MARR = 15% Samsung Tech Co. bought a metrology equipment at a cost of $5,000. The maintenance cost schedule for the next 8 years is show in the table below. Determine the value of EUAC of the maintenance costs in year 6. MARR = 10%.

Explanation / Answer

7.

Use excel formula = IRR(cash flow values) to get the return %. We get 11.46% as rate of return

0 -30000 1 5000 2 6000 3 7000 4 8000 5 9000 6 10000 IRR 11.46%

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