3. A company is considering a project with the following cash flows. The external interest rate is 5%. Is this a good investment based on rate of return analysis and a MARR of 8%? Give the exact ROR, interpolate if necessary. Year Cash Flow -$50,000 -$30,000 $30,000 -$10,000 $80,000 3 4

3. A company is considering a project with the following cash flows. The external interest rate is 5%. Is this a good investment based on rate of return analysis and a MARR of 8%? Give the exact ROR, interpolate if necessary. Year Cash Flow -$50,000 -$30,000 $30,000 -$10,000 $80,000 3 4

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter26: Capital Investment Analysis

Section: Chapter Questions

Problem 3CMA

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

3.
A company is considering a project with the following cash flows. The external
interest rate is 5%. Is this a good investment based on rate of return analysis and a MARR of
8%? Give the exact ROR, interpolate if necessary.
Year Cash Flow
-$50,000
-$30,000
$30,000
-$10,000
$80,000
1
4
I

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