A firm is considering an investment.The most likely data values were found during the feasibility study.Analyzing past data of similar projects shows that optimistic values for the first cost and the annual benefitare 5% better than most likely values.Pessimistic values are 15% worse.The firms most experiencedproject analyst has estimated the values for the useful life and salvage value.

Cost Net Annual Benefit Salvage Value Useful Life in Years Optimistic $950 210 $100 12 Most Likely $1000 200 0 10 Pessimistic $1150 170 0 8 1. Compute the rate of return for each estimate.

2. If a 10% before-tax MARR is required, is the investment justified under all three scenarios?