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An irrigation system is being considered with a first cost of $200,000 with (current) annual maintenance costs of $2,000. The irrigation system is expected to bring $22,000 per year in additional (current) revenues. The real dollar MARR is 4% and the inflation rate is anticipated to be 3% per year. Assume the system will have a 20-year life.

a) Using the current cash flows, find the current IRR on this project.

b) What is the current MARR?

c) Should they invest?

d) Convert current cash flows to real cash flows

e) Find the present worth of the project using real MARR?

f) Should they invest?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92093743

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