Question

Question7 A company is considering an investment which will require two payments $44,000 each at the beginning and at the end of the first year. The company expects the investment to achieve revenues of $22,300 per year up to and including the eighth year. Revenues begin to be collected at the end of the second year Minimum Acceptable Rate of Return (MARR) -7%. Please note that because this project is an investment, MARR provides the mathematical interest rate used for calculations (i). al Draw the cash flow diagram (CFD) for this investment showing cost and revenue components of the CFD b] If all the initial costs needed for this investment (total costs of $88,000) are to be financed from a line of credit. What is remarkable about a line of credit, as opposed to a ln, s that you can borrow the money whenever you want. Interest will only accrue after you borrow. The credit limit will always be available, even if you choose not to use it. That is, money can be borrowed whenever needed from an account with a maximum credit of $200,000. The investor decided to pay back this money to the line of credit as a lump sum (one payment) at the end of the project (whenever the last revenue is received). Find the maximum interest rate for this line of credit so that the project is feasible.

Answer 1