Engineering Economic Analysis

7-3

Problems

For the following diagram, compute the rate of return.

25

2f I

15

i

10

l t

0-1-2-3-4-5

1

42.55

7-4 For the following diagram, compute the rate of return

on the $3810 investment.

500 500 500 500

i 'to i 'to i 'to i

0-1-2-3-4-5-6-7- ...n= 00

1

3810

7-5 For the following diagram, compute the rate of return.

A= 1000

o I I I I I I I I 11Oli.ii.i.ii1... n= 00

.to 1

5000

7-6 Consider the following cash flow:

Year Cash Flow

o -$500

1 +200

2 +150

3 +100

4 +50

Compute the rate of return represented by the cash

flow.

7-7 Consider the following cash flow:
Year Cash Flow
o -$1000
1 0
2 +300
3 +300
4 +300
5 +300

Compute the rate of return on the $1000 investment

to within 0.1 %. (Answer:5.4%)

7-8 Consider the following cash flow:

Year

o 1 2 3 4 5

Cash Flow

-$400

o

+200

+150

+100

+50

Write one equation, withias the only unknown, for

the cash flow. In the equation you are not to use more

than two single payment compound interest factors.

(You may use as many other factors as you wish.)

Then solve your equation fori.

Compute the rate of return for the following cash flow

to within112%.

7-9

Year

o

1-10

Cash Flow

-$100

+27

(Answer: 23.9%)

7-10 Solve the following cash flow for the rate of return to

within an112%.

Year

o 1 2 3 4 5

Cash Flow

-$500

-100

+300

+300

+400

+500

7-11 Compute the rate of return for the following cash flow.

Year

1-5

6-10

Cash Flow

-$233

+1000

7-12 Compute the rate of return for the following cash flow

to within 0.5%.

Year

o 1 2 3 4 5

(Answer: 9.3%)

Cash Flow

-$640

o

100

200

300

300

, ,

( ,

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