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Q305Fall12

Q305Fall12

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Published by Jamie Woods

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Published by: Jamie Woods on Nov 07, 2012
Copyright:Attribution Non-commercial

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11/14/2012

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EC 314: Public and Private InvestmentFall 2012Q3: Choice#5
PASS NO PASSName:Consider the following assets.The far right of the table may be read as the incremental internal rate of return betweenthe row asset moving to the column asset.0 1 2 3 4 PW(10%) IRR A B C D LifeA -4.00 0.00 0.00 0.00 8.00 1.46 57.82 0.00 11.18 4.00B -5.00 0.00 9.00 0.00 1.76 21.64 0.00 13.97 3.00C -6.00 0.00 0.00 10.00 0.83 13.62 7.62 4.00D -2.00 0.00 0.00 0.00 1.31 41.42 2.00
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1. What is the internal rate of return of asset A?2. At a MARR of 10% and requirement to provide 12 years of service, which asset wouldyou chose? Be sure to explain why this is the best asset.3. At a MARR of 10% and
no
service requirement, which asset would you chose? Be sureto explain why this is the best asset.4. At a MARR of 20% and no service requirement, which asset would you chose? Be sureto explain why this is the best asset.

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