What are the ROR values for the table below, and how they properly calculated? A
ID: 1178387 • Letter: W
Question
What are the ROR values for the table below, and how they properly calculated?
Alternatives
A
B
C
D
E
Cost
8500
4500
6000
2100
3300
UAB
890
610
725
330
480
life/yr
20
20
20
20
20
ROR[?]
%u2026%u2026.
%u2026%u2026%u2026
%u2026%u2026%u2026
%u2026%u2026%u2026.
%u2026%u2026%u2026..
Alternatives
A
B
C
D
E
Cost
8500
4500
6000
2100
3300
UAB
890
610
725
330
480
life/yr
20
20
20
20
20
ROR[?]
%u2026%u2026.
%u2026%u2026%u2026
%u2026%u2026%u2026
%u2026%u2026%u2026.
%u2026%u2026%u2026..
What are the ROR values for the table below, and how they properly calculated?Explanation / Answer
Hi,
Please find the answer as follows:
To calculate ROR with EUAB and cost, you need to put the value of NPV as 0 and use the following equation:
Project A:
NPV = 0 = -8500 + 890/(1+r)^1 + 890/(1+r)^2 + 890/(1+r)^3 + 890/(1+r)^4 + 890/(1+r)^5..............................................+ 890/(1+r)^19 + 890/(1+r)^20.
You can use trial and error method to calculate r, which would be ROR:
Project A ROR = 8.37% or 8.4%
Project B:
ROR = 12.20% or 12.2%
Project C:
ROR = 10.42% or 10.4%
Project D:
ROR = 14.70 or 14.7%
Project E:
ROR = 13.36% or 13.4%
Thanks.
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