Question Solved1 Answer 7.28 Consider two investments with the following sequences of cash flows: 0 Net Cash Flow Project A Project B -$30,000 -$15,000 $2,000 $10,000 $6,000 $10,000 $12,000 $10,000 $24,000 $10,000 $28.000 $5,000 (a) Compute the iº for cach investment. (b) Plot the present worth curve for each project on the same chart and find the interest rate that makes the two projects equivalent. (c) If A and B are mutually exclusive investment projects, which project is more economically desirable at MARR of 15%?

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Transcribed Image Text: 7.28 Consider two investments with the following sequences of cash flows: 0 Net Cash Flow Project A Project B -$30,000 -$15,000 $2,000 $10,000 $6,000 $10,000 $12,000 $10,000 $24,000 $10,000 $28.000 $5,000 (a) Compute the iº for cach investment. (b) Plot the present worth curve for each project on the same chart and find the interest rate that makes the two projects equivalent. (c) If A and B are mutually exclusive investment projects, which project is more economically desirable at MARR of 15%?
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Transcribed Image Text: 7.28 Consider two investments with the following sequences of cash flows: 0 Net Cash Flow Project A Project B -$30,000 -$15,000 $2,000 $10,000 $6,000 $10,000 $12,000 $10,000 $24,000 $10,000 $28.000 $5,000 (a) Compute the iº for cach investment. (b) Plot the present worth curve for each project on the same chart and find the interest rate that makes the two projects equivalent. (c) If A and B are mutually exclusive investment projects, which project is more economically desirable at MARR of 15%?
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Solution:  Refer the attached screenshot for anwers  Part A )  IRR is calculated for both the project and it is 25.66% for A and 57.91% for Project B  Part B )  In order to find the interest rate that makes the NPV or present worth of these project same, we have to find the NPV at different interest rates and then plot the graph and crossover point will be that rate.&# ... See the full answer