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Question: A potential project has an initial capital investment of $100,000. Net annual revenues minus expenses are estimated to be $40,000 (A$) in the first year and to increase at the rate of 6.48% per year. The useful life of the primary equipment, however, is uncertain, as shown in the following table:

408_P(N).png

Assume that im = MARR = 15% per year and f = 4% per year. Based on this information,

a. What are the E(PW) and SD(PW) for this project?

b. What is the Pr{PW ≥ 0}?

c. What is the E(AW) in R$? Do you consider the project economically acceptable, questionable, or not acceptable, and why?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M92315953

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