Refer to Problem 5-2. Assuming the residual value of the building alone (no land) is negligible, the
Question:
Refer to Problem 5-2. Assuming the residual value of the building alone (no land) is negligible, the internal rate of return for this situation is closest to:
(a) 0%
(b) 4%
(c) 10%
(d) 20%
Data from Problem 5-2:
Buildings that are constructed to be environmentally responsible are referred to as “green buildings.” They cut down on energy consumption, increase water efficiency, improve indoor air quality, and use recycled materials in their construction. According to recent studies, money spent on a green building will pay for itself ten times over the 50-year life of the building. Assuming end-of-year annual savings of P/5, where P is the investment cost of the building, draw a cash flow diagram for this situation.
Step by Step Answer:
Engineering Economy
ISBN: 978-0133439274
16th edition
Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling