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Fundamentals of Engineering Economics 3rd Edition by Chan Park
Edition 3ISBN: 978-0132775427Fundamentals of Engineering Economics 3rd Edition by Chan Park
Edition 3ISBN: 978-0132775427 Exercise 4
You are considering an investment project with the following financial information:
(a) Required investment = $500,000
(b) Project life = 5 years
(c) Salvage value = $50,000
(d) Depreciation method = straight-line depreciation (no half-year convention)
(e) Unit price = $40
(f) Unit variable cost = $18
(g) Fixed annual cost = $230,000
(h) Annual sales volume = 100,000 units
( i) Tax rate = 35%
(j) MARR = 15%
Suppose the company is most concerned about the impact of its price estimate on the project's rate of return. How would you address this concern?
(a) Required investment = $500,000
(b) Project life = 5 years
(c) Salvage value = $50,000
(d) Depreciation method = straight-line depreciation (no half-year convention)
(e) Unit price = $40
(f) Unit variable cost = $18
(g) Fixed annual cost = $230,000
(h) Annual sales volume = 100,000 units
( i) Tax rate = 35%
(j) MARR = 15%
Suppose the company is most concerned about the impact of its price estimate on the project's rate of return. How would you address this concern?
Explanation
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Given information:
• Initial investment...
Fundamentals of Engineering Economics 3rd Edition by Chan Park
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