Question

fter 15 years of employment in the airline industry, John started his own consulting company to use physical and computer simulation in the analysis of commercial airport accidents on runways. He estimates his average cost of new capital at 8% per year for physical simulation projects, that is, where he physically reconstructs the accident using scale versions of planes, buildings, vehicles, etc. He has established 17% per year as the MARR. What net rate of return on capital investments for physical simulation does he expect

Answer 1

The answer is "9%".

Step-by-step explanation:

Please find the complete question in the attached file.

The formula for calculating the net return rate:

`\to \text{Net return rate= MARR - Capital Cost}`

`= 17\% - 8\% \\\\= 9\%`

Therefore, the net return rate is 9%.