Question 9 (5 points) In Rate Of Return (ROR) analysis, independent projects wit

Question

Question 9 (5 points)

In Rate Of Return (ROR) analysis, independent projects with i* < MARR are eliminated.

True

False

Question 10 (5 points)

Incremental ROR analysis requires equal life alternatives.

True

False

Question 11 (5 points)

In ROR analysis, the numerical range of i can be from:

a)0% to infinity

b)0% to +100%

c)-100% to infinity

e)MARR to infinity

f)0 to MARR

Question 12 (10 points)

A company that manufactures brushless blowers invested $650,000 in an automated quality control

system for blower housings. The resultant savings was $160,000 per year for 5 years. If the

equipment had a salvage value of $50,000, what rate of return per year did the company make?

Write the Standard Notation

Solve by trial & error or spreadsheet to the nearest 1/10%

Explanation / Answer

True

False

e)MARR to infinity

ROR = IRR = ??

0 = - 650,000 + 160,000/(1+r) + 160,000/(1+r)^2 + 160,000/(1+r)^3 + 160,000/(1+r)^4 + 210,000/(1+r)^5

r = 0.0928 = 9.28 %

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