Question

A company wants to analyze the following investment option using its rate of return. They use a MARR of 15% to determine whether something might be a good investment in this category. Calculate the accurate internal rate of return for the given cash flow as precisely as possible, interpolating as necessary. The MARR is a good starting point. Decide if the investment should be made

Answer 1

Remainder Part of Question:

Cash Flow

Initial Costs $365,000

Annual Benefits $90,000

Operation and Maintenance $15,000

Salvage Value $25,000

Lifetime in years 10 Years

Answer:

As the IRR > MARR, hence the investment is financially viable.

Step-by-step explanation:

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