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(3) The following table contains a cash flow series for an investment opportunity: (30 marks) Year 0 1 2 5 Net Cash flow +3,000 -
(3) The following table contains a cash flow series for an investment opportunity: (30 marks) Year 0 1 2 5 Net Cash flow +3,000 - 1000 - 5000 + 2000 + 2000 + 2000 (NCE) 1) What is the type of this cash flow (conventional or non-conventional), Do we have single or multiple RoR? (4 marks) 2) If we have multiple rates, remove the multiple rate by using modified rate of return method (MIRR) with in = 9%, and i;= 12%, or use the conventional method if having single ROR with MARR = 6%. (12 marks) 3) is the investment justified or not knowing that MARR = 6%? (4 marks) 04) Compare between the following ME alternatives using incremental rate of return analysis with MARR= 6% (25) Alternative A B. Item Initial Cost 160 120 Benefits year 20 18 Salvage value 80 Useful Life (years) infinity 20 Good Luck
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