Question

Can you detail explain how solved please,

this is from Basic of Engineer Economic

1. What is the rate of return if you purchase the HAL 9000 from only information given by OEECI? It is i* within: a. 0 = -8M - 12K(PIA, i*, 10) + 1M(P/G, i*, 3) + 23K(P/F, i*, 10) b. O = (50K - 62K)(PIA, i*, 10) + 1M(P/G, 1*, 10) + 33K(P/F, i*, 10) - 8M C. 0 = -1.5M(P/A, i*, 10) + 3M + (50K - 62K)(P/A, i*, 10) + 1M(P/G, i*, 9) + 23K(P/F, i*, 8) d. 0 = -1M + (29K)(PIA, i*, 10) + 1M(P/G, i*, 10) + 23K(P/F, i*, 10) e. 0 = -8M + (29K)(PIA, 1*, 8) + 1K(P/G, i*, 8) + 23K(P/F, i*, 8) -1M + (29K)(PIA, i*, 10) + 1M(P/G, i*, 10) + 23K(P/F, i*, 10)+ (50K - 62K)(PIA, i*, 10) + 1M(P/G, i*, 10) + 33K(P/F, i*, 10)

Answer 1

1.

Correct Answer:

B

Working note:

Data will only be taken of alternative HAL.

Let, rate of return = i

Then,

Initial investment = PW of uniform annual revenue - PW of AOC + PW of arithmetic gradient + PW of the salvage value

8M = 50K*(P/A, i, 10) - 62K*(P/A, i, 10) + 1M*(P/G, i, 10) + 33K*(P/F, i, 10)

0 = (50K-62K)*(P/A, i, 10) + 1M*(P/G, i, 10) + 33K*(P/F, i, 10) - 8M

Above expression is matched by the alternative B of the given problem.