please show all steps 21. The Internal Rate of Return: (2 Pts) a. Requires at le
ID: 365454 • Letter: P
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please show all steps
21. The Internal Rate of Return: (2 Pts) a. Requires at least one sign change in the cash flow to be computed. b. Is the maximum interest rate allowed by the Internal Revenue Service c. Is the discount rate that results in a Benefit-Cost Ratio of 0 d. Is the ratio of Net Income divided by Revenue e. None of the above. 22. A regional airport is considering installing a new baggage handling system. different vendors submitted their bids on the system. The airport is to replace current system. The cash flows that describe each baggage handling systemw respect to the current system are given below. (3 Pts) Two its th Year (n) Vendor A Vendor B Vendor B- Vendor A -$500,000 -$600,000 -$100,000 17,710 0 1 - 15 48,170 5% 65,880 790 IRR 15.73% a. Vendor B is preferred as long as the airport's MARR is less than 15.73% b. Vendor B is preferred as long as the airport's MARR is less than 7% C. Vendor A is preferred as long as the airport's MARR is less than 5% d. Vendor A is preferred if the airport's MARR is greater than 15.73% e. None of the above When using the benefit to cost ratio method of analyzing a project, which of the following is a TRUE statement? (2 Pts) 23. It will always produce a recommendation consistent with the simple payback period method a. b. It will always produce a recommendation consistent with net present value, net future value, and annual equivalent (periodic equivalent) methods. It can be used only to evaluate projects from the public sector (such as bridges and roadways) c. a, b, and c are all trueExplanation / Answer
22.
Hence option B
Discount rate r 5% Year 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Production -500000 48170 48170 48170 48170 48170 48170 48170 48170 48170 48170 48170 48170 48170 48170 48170 NPV 45876.19 43691.61 41611.06 39629.58 37742.46 35945.2 34233.52 32603.35 31050.81 29572.2 28164 26822.86 25545.58 24329.12 23170.59 Total value -11.8723 Formula used NPV= Amount/ (1+ r)^year no Total Value= Sum of yearly NPV calculatedRelated Questions
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