1- Find the EROR by the MIRR method if MARR = 10.5%, ib = 8%,
and i;= 10%
2- Is this project economically justified?
Homework Answers
PW = -5600 (P/F, 8%,1) - 2000 (P/F, 8%,2) - 1400 (P/F, 8%,3) -
5600 (P/F, 8%,4)
PW = -5600 * 0.9259 - 2000 * 0.8573 - 1400 * 0.7938 - 5600 *
0.7350
PW = -12,126.96
FW = 3000 (F/P, 10%,5) + 5100 (F/P, 10%,4) + 1000 (F/P, 10%,3) +
8200 (F/P, 10%,2) + 8300 (F/P, 10%,1) + 1300
FW = 3000 * 1.6105 + 5100 * 1.4641 + 1000 * 1.3310 + 8200 * 1.2100
+ 8300*1.100 + 1300
FW = 33981.41
PW0 (F/P,i%, 5) + FW = 0
-12,126.96 (1+i)^5 + 33981.41 = 0
(1+i)^5 = 2.80214
i = 22.885%
Since it is higher than MARR thus the project is economically
justified
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