Question

Student Name: QUID: Section: Question 1 (6pts). For the cash flows shown below, answer the following questions. (Assume MARR = 15% (1) (2pts) Provide the equation using PW to find the ROR of the cash flow given. (2) (2pts) Decide whether the project is acceptable or not using RATE function in MS Excel. Provide the screenshot (3) (2pts) Decide whether the project is acceptable or not using IRR_function in MS Excel. Provide the screenshot Year Factor 0 Investment ($) 1-10 Revenue ($ per year) 1-10 M&O cost $ per year) 10 Salvage ($) Amounts 1.200.000 300,000 100,000 600,000 Question 2 (4pts). For the cash flows shown below, decide whether the project is acceptable or not using IRR function in MS Excel (Assume MARR = 10%). Provide the screenshot Revenue ($) M&O cost ($) Salvage ($) Year First cost ($) 0 1,000,000 100,000 2 300,000 200,000 400,000 300,000 500,000 100,000 0 200,000 200,000

anyone can check my answer?

Answer 1

ANSWER:

1)

A) Your part a is wrong.

right answer is pw = -1,200,000 + 200,000(p/a,i,10) + 600,000(p/f,i,10) (we then equate pw to zero in order to find the ror.)

B) Your part b is right

C) Your part c is right.

2) Your question 2 is wrong as the irr is 12.89% as you have ade the mistake in year 3 and year 4 cash flow as they will be 300,000 respectively.

YEAR	0	1	2	3	4	5
CASH FLOWS	-1,200,000	200,000	200,000	300,000	300,000	500,000
IRR	12.89%

SO PROJECT IS ACCEPTABLE AS IRR > MARR.