7- Mr. Goodman, a friend of yours, is asked to invest in the following project: installation and operation of a facility with a life span of five years. The initial investment is $90M. It will have a...




7- Mr. Goodman, a friend of yours, is asked to invest in the following project: installation and


operation of a facility with a life span of five years. The initial investment is $90M. It will have a net


profit of $25M/Yr the first two years and of $30M/Yr in years 3,4, and 5. At the end of year 5, it has to


be disposed of at a cost of $10M with no resale value. He also has the option of investing the same


money in a project that will bring him $29M per year. If he has the money and his opportunity cost of


money is 10% (I=10%), which proposal do you advise him to accept? Why? Explain.


8- A developer is given the following two options for the purchase of a property:


a. Pay $100,000


b. Pay $30,000 at the end of each year, starting one year after purchase, for the next five years.


Which option should he take?


9- In engineering economic analysis of projects, when using Net Present Worth or Benefit/Cost ratio


we have to equalize the lives of the projects. This equalization is not necessary when using EUAW


methods. Why? Can you show this using a cash flow diagram?




Dec 09, 2021
SOLUTION.PDF

Get Answer To This Question

Related Questions & Answers

More Questions »

Submit New Assignment

Copy and Paste Your Assignment Here