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Homework 4

The document presents two engineering economy homework questions. The first question involves evaluating the purchase of a machine with a cost of Rs. 40,000 and an annual revenue of Rs. 10,000 over 10 years at a 15% interest rate. The second question requires calculating the internal rate of return for a new product line with an initial investment of Rs. 2,000,000 and an annual net profit of Rs. 350,000.

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4 views1 page

Homework 4

The document presents two engineering economy homework questions. The first question involves evaluating the purchase of a machine with a cost of Rs. 40,000 and an annual revenue of Rs. 10,000 over 10 years at a 15% interest rate. The second question requires calculating the internal rate of return for a new product line with an initial investment of Rs. 2,000,000 and an annual net profit of Rs. 350,000.

Uploaded by

ertc13m220110
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Engineering economy

Homework/
Q1
Consider a machine that costs Rs.40,000 and a 10 years
useful life .at the end of 10 years , it can be sold for
Rs.5000 after tax adjustment . if the firm could earn an
after tax revenue of Rs. 10,000 per year with this machine
, should it be purchased ( accepted or not )at an interest
rate of 15%,compounded annually , use annual worth
method.

Q/2
A company is trying to diversity its business in a new
product line , the initial outlay of the project is
Rs .2000000. the annual net profit is R s. 3.50000. Find
the rate of return for the new business. Use IIR ( Internal
rate of return) .

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