Question 2 2.1 Define the Minimum Attractive Rate of Return and the Internal Rate of Return for engineering projects. Wh

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Question 2 2 1 Define The Minimum Attractive Rate Of Return And The Internal Rate Of Return For Engineering Projects Wh 1 (62.65 KiB) Viewed 28 times

Question 2 2.1 Define the Minimum Attractive Rate of Return and the Internal Rate of Return for engineering projects. What are basic advantages of the External Rate of Return over the Internal Rate of Return method? (10%) 2.2 A new logistic system has been proposed by engineers to increase the productivity of logistic operations. The investment cost is £50,000, and the system will have a market value of £3,000 at the end of a study period of 10 years. Increased productivity attributable to the logistic system will amount to £12,000 per year after extra operating costs have been subtracted from the revenue generated by the additional production. The company's MARR is 20% per year The management team asked you to provide a cash-flow diagram for this investment opportunity, to calculate the PW of this project and to decide whether this proposal should be installed or not. (Hint: Using the PW method and Cash flows are discrete end-of-year amounts). [30%) 2.3 Given the information and results from 2.2, if continuous compounding had been specified for a nominal interest rate(r)of 20% per year. Calculate the PW. Should the new system be installed? (10%)