Engineering Economic Analysis

r Difficulties in Solving for an Interest Rate 231 Why Multiple Solutions Can Occur , Example7A-l producedunexpectedresults. ...

232 RATE OF RETURN ANALYSIS Thus, Descartes' rule for polynomials gives the following: Number of Sign Changes,m o 1 2 3 4 Number ...

Difficulties in Solving for an Interest Rate 233 Other examples can be found in incremental comparisons of alternatives with une ...

(^234) RATEOF RETURNANALYSIS "1 SOLUTION. The first step is to draw the cash flow diagram. Then counting the three sign changes ...

Difficulties in Solving for an Interest Rate 235 Figure 7A-2 shows the spreadsheet calculations and the graph ofPW versusi. FIGU ...

....I 236 RATEOF RETURNANALYSIS $2.5M t $1.5M I t $01M 0-1-2-3-4-5-6-7-8 j -$J.5M ~ -$I.5M 1 -$2.5M $3.5M 1 -$4M SOLUTION Figure ...

Difficulties in Solving for anInterest Rate 237 Aprojecthas a first cost of $120,000.Net revenuesbegin at $30,000in Year 1, and ...

~-.. -. -. - .... .~.- ~._~. 238 RATEOF RETURN ANALYSIS In this case, there is 1 positive root of 21.69%. The value can be used ...

Difficulties in Solving for an Interest Rate 239 External Investing Rate -$0.5M -$1.5M $2.5M -$4M External Financing Rate P(1+ ...

I .- 240 RATEOF RETURN ANALYSIS 3., Find the future worth of the receipts with the investingrate. FW = 3.5M(FjP, 15%,6)+2.5M(FjP ...

Problems 7A-1 investing rateof 12% and anexternal borrowing rate of 6%. Compute and use the MIRR as the project's rate of return ...

242 RATEOF RETURNANALYSIS benefits by $8000. The cash flow for the project is as follows: Year Cash Flow o -$15,000 1 +10,000 2 ...

Calculate the rate of return and state whether it has been an acceptable rate of return. 7A-25 Consider the following situation. ...

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1- ,. I l Incremental Analysis Tapping into Controversy When New York's Tappan Zee Bridge opened in 1955,it seemed big enough to ...

246 INCREMENTAL ANALYSIS We now see how to solve problems by each of three major methods, with one exception: for three or more ...

Graphical Solutions 247 FIGURE 8-t Graph ofPW of benefitsversus PW of cost. $30 $27 $24 --------------------------Alternative 2 ...

248 INCREMENTALANALYSIS $30 $27 $24 CI) tE $21G.> c:: ~$18 '5 '€ $15o ~c::$12 G.> p..,~ $9 Alternative 1 $6 $3 $3 $6 $9 $1 ...

GraphicalSolutions 249 Initial cost Uniform annual benefit End-of-useful-life-salvage value Usefullife, in years MachineX $200 9 ...

250 INCREMENTALANALYSIS FIGURE 8-5 Solving multiple-alternative problems by successive two-alternative analyses. Three Alternati ...