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    E.econ. Ass 5 Fall 15-16

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    abdullah azayem
    This document contains information about an engineering economics assignment on rates of return. It includes details about a chemical company purchasing a computer-controlled filter for $100,000 that is expected to last 10 years. It asks the student to calculate the internal rate of return and external rate of return to determine if the filter purchase was economically sound. It also provides cash flow information for two mutually exclusive 5-year proposals and asks the student to determine which alternative should be selected using internal rate of return and external rate of return methods.

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    E.econ. Ass 5 Fall 15-16

    Uploaded by

    abdullah azayem
    16 views1 page
    This document contains information about an engineering economics assignment on rates of return. It includes details about a chemical company purchasing a computer-controlled filter for $100,000 that is expected to last 10 years. It asks the student to calculate the internal rate of return and external rate of return to determine if the filter purchase was economically sound. It also provides cash flow information for two mutually exclusive 5-year proposals and asks the student to determine which alternative should be selected using internal rate of return and external rate of return methods.

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    Engineering Economics

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    This document contains information about an engineering economics assignment on rates of return. It includes details about a chemical company purchasing a computer-controlled filter for $100,000 that is expected to last 10 years. It asks the student to calculate the internal rate of return and external rate of return to determine if the filter purchase was economically sound. It also provides cash flow information for two mutually exclusive 5-year proposals and asks the student to determine which alternative should be selected using internal rate of return and external rate of return methods.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    16 views1 page

    E.econ. Ass 5 Fall 15-16

    Uploaded by

    abdullah azayem
    This document contains information about an engineering economics assignment on rates of return. It includes details about a chemical company purchasing a computer-controlled filter for $100,000 that is expected to last 10 years. It asks the student to calculate the internal rate of return and external rate of return to determine if the filter purchase was economically sound. It also provides cash flow information for two mutually exclusive 5-year proposals and asks the student to determine which alternative should be selected using internal rate of return and external rate of return methods.

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    © All Rights Reserved
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    CANADIAN INTERNATIONAL COLLEGE (CIC)

    COURSE NAME :ENGINEERING ECONOMICS. COURSE CODE : IEN 351


    SUPRVISOR: PROF. MAGDY ABDELAZIZ ZAHW
    ______________________________________________________________________________
    Assignment # 5CH5:

    RATES OF RETURNS

    1. Many chemicals Unlimited -- purchases a computer-controlled filter for EGP 100,000. The
    purchase price is borrowed from a bank at 15% compounded annually. The loan is to be paid
    back with equal annual payments over a 5-year period. The filter is expected to last 10 years, at
    which time it will have a salvage value of $10,000. Over the l0-year period the operating and
    maintenance costs are anticipated to equal EGP 20,000/year; however, by making the
    investment, annual fines of EGP 50,000 for pollution will be avoided. The firm expects to earn
    12% on its investments. Determine each of the following measures of investment worth and state
    whether or not the filter purchase was economically sound.
    a. Internal rate of return.
    b. External rate of return.

    2. Two mutually exclusive proposals, each with a life of 5 years, are under consideration. MARR
    is 12%. Each proposal has the following cash flow profile:

    A. Determine which alternative the decision maker should select. Use an incremental cash
    flow approach and the internal rate of return method.
    B. Repeat part (b) using the external rate of return method.

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