12. An electric company is considering a proposal to supply power to a small town, Initial capital investment is P18M plus another P25M spread out evenly over a five year period. The project will last for 15years and income generated is expected to be P7.5M per year starting at the end of the fourth year. Determine the feasibility of the proposal using the ERR method with a 14% MARR and a 15% reinvestment rate. (Ans. Proposal is not feasible, 13%)

12. An electric company is considering a proposal to supply power to a small town, Initial capital investment is P18M plus another P25M spread out evenly over a five year period. The project will last for 15years and income generated is expected to be P7.5M per year starting at the end of the fourth year. Determine the feasibility of the proposal using the ERR method with a 14% MARR and a 15% reinvestment rate. (Ans. Proposal is not feasible, 13%)

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 19EA: Redbird Company is considering a project with an initial investment of $265,000 in new equipment...

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