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Equipment needed at a Valero Corporation refinery for the conversion of corn stock to ethanol, a cleaner- burning gasoline additive, will cost $175,000 and have net cash flows of $35,000 the first year, increasing by $10,000 per year over the life of 5 years.

(a) Determine the AW amounts at different MARR values to determine when the project switches from financially justified to unjustified. (Hint: Start at 12% per year and increase by 1% per year.)

(b) If a spreadsheet is used, plot a graph of AW versus interest rate on the spreadsheet.

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M91720139

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