processing facility is considering shutting down or undertaking a major overhaul. The major overhaul will require $2MM. If the overhaul is accomplished, it will extend the life of the plant for five...

processing facility is considering shutting down or

undertaking a major overhaul. The major overhaul will

require $2MM. If the overhaul is accomplished, it will extend

the life of the plant for five more years with anticipated profits

of $500,000 per year.

(a) Solve for the rate of return of the possible overhaul investment using successive substitution with i = 10% per year as a starting guess. First, use Equation (3.50) to check if the successive substitution solution may diverge:

(b) Solve using the bounded Wegstein method.