Question

After a 20 year career working for a Civil Engineering firm, you decided to open your own engineering consulting firm. After several years in business, you reflect to determine if this was a wise decision financially. Your MARR is 25%. Based on the following expenses and revenue information, find the following? a. How many possible rate of return values are there based on Descartes Method? b. How many possible rate of return values are there based on Norstrom's method? C. Find a positive internal rate of return value for the engineering consulting firm. Was it a good investment? Year 0 1 Revenue, $ 0 4 5,000 180,000 195,000 200,000 220,000 Expenses, $ 150,000 50,000 60,000 70,000 70,000 85,000 200K

Answer 1

1. One result is based on Descretes method of calculas and it is the result of initiation year in which only expenses were incutred.

2.Except for the initiation year result all other possible result are based on Norstrom's method .

3.Internal rate of return is 69.07% for the given period for the engineering consulting firm.since the targeted MARR was 25% and the returns are more than the target the investment is to be considered as good investment decision .