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Homework 7 . USE ROR METHOD
1. Solve the cash flow below for the rate of return to within o,5%
Year
Cashflow
-500
-100
+300
+300
+400
+500
0
1
2
3
4
5
2. For the cash flow below, compute the rate of return
Year
1-5
6-10
Cashflow
-$223
+1000
3. Two investment opportunities are as follows
A
B
$150
$100
Uniform annual benefit
25
22,25
End of Useful life SV
20
0
Useful life, year
15
10
First Cost
At the end of ten years, alt. B is not replaced. Thus, the comparison is 15years of A vs 10
years of B. if MARR is 10% which alternatives should be selected