What rate of return per year will the investor make

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Engineering Economics Assignment

Q1. The five alternatives below, whose values are listed in thousands of dollars, each have a 7-year useful life. Our agency has an MARR of 12%. Do the following:

a) Determine which project to select, if they are mutually exclusive, by using incremental B/C analysis.

b) Determine which bundle of projects to select if the agency has a budget of $700,000 available for these projects.

	A	B	C	D	E
Cost	$100	$200	$300	$400	$500
Annual benefit	37	69	83	126	150

Q2. An investor is determining whether to invest $500,000 in a developing a new rental property on Long Island. Her estimated annual costs are $12,000 and annual revenues are $40,000.

a) What rate of return per year will the investor make over a 30-year period ignoring the salvage value?

b) If the property can be sold for $200,000 what is the rate of return?

c) What method should the investor use to consider whether the conceptual investment cost provided is reasonable, and what factors should be considered in determining that cost? (Please use at least 2 references to discuss.)

Reference no: EM131910404

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