Question
The following cash flows result from a potential construction contract for Joe Engineering. Receipts of $500,000 at the start of the contract and $1200000 at
The following cash flows result from a potential construction contract for Joe Engineering. Receipts of $500,000 at the start of the contract and $1200000 at the end of the fourth year. Expenditures at the end of the first year of $400000 and at the end of the second year of $900000. A net cash flow of zero at the end of the third year. a) What rate of return method is most appropriate for determining if Joe should accept this project? Why? b) Find the rate of return using the appropriate rate of return method using a MARR of 25%. Should Joe accept this project? |
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