4 out of Frdthe exact incremental ROR value between project M and N below, if bo

Question

4 out of Frdthe exact incremental ROR value between project M and N below, if both projects have n . 20 years if MAR-5%. First cost Annual Property Tax Annual income 60,000 3000 11,000 000 5000 6,000 stion 16 4 out of 4 point You torrow $10 000 to prot ase a car. You havetorepay the kan n 48 equaooot per od mormy paym tainterest is cak ulated at ,25% per month. The ore, the ffective rate of interest per year and effective rate of interest per month (respectively) are: uestion 17 4 out of 4 points Find Payback Poriod with 10% of the Interest of the following project which has salvage value (sv) $100 End-of-year Negative Cash flow 1000 Positive Cash fow 10025040 200 500 200 Answer (in years) Cash tow 200, and 600 SV

Explanation / Answer

16) Given that rate of interest is 1.25% per month. Find the effective rate of interest per year as r% = (1 + 1.25%*)^12 - 1 = 16.075%. Effective rate of interest per month = 16.075% /12 = 1.34%

17) The payback period is the time period when the cumulative cash flow becomes positive. Here it is 5 years

EOY Cashflows Negative Positive Final PW Cumulative 0 -1000 -1000 -1000.00 -1000.00 1 100 100 90.91 -909.09 2 -200 250 50 41.32 -867.77 3 400 400 300.53 -567.24 4 -200 500 300 204.90 -362.34 5 800 800 496.74 134.40

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