Purchase Solution

Project evaluation using the MARR.

Not what you're looking for?

Ask Custom Question

You just purchased a used car for $3,000 and, being enrolled in this course, you are curious as to how long you should keep the car. You will graduate soon and you do not want to keep the car longer than 4 years. You have estimated the costs and market value as show in the following table.
Year 1 Year 2 Year 3 Year 4
Annual expense $950 $1050 $1,100 $1,500
Market value 2,250 1,800 1,450 1,160
at end of yr.

If your MARR is 12% per year, at the end of which year should you dispose of the car?

Purchase this Solution
Solution Summary

The solution provides a detailed guideline for assessing a project by using the MARR.

Solution provided by:
Chidi Ngene, M. Sc.
Education
  • B. Sc., University of Nigeria
  • M. Sc., London South Bank University
Recent Feedback
  • "Thank you."
  • "thank you Chidi Ngene.. if you have any APA references would be great"
  • "Thank you so much for your help, your explanations were easy to understand and apply!"
  • "are you able to highlight the equations used either on the xlsx or a word doc as to how each graph was formed- overall looks fine i just need help understanding this myself"
  • "Chidi Ngene, M. Sc. Was extremely helpful as without the help and guidance I would have failed, but with the help I passed. I still have a lot to learn and in need of the guidance to understand and learn more on the subject. I would recommend Chidi Ngene and BrainMass to anyone that are in need of help. Thank you!!"
Purchase this Solution
Free BrainMass Quizzes
Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

Lean your Process

This quiz will help you understand the basic concepts of Lean.

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

Operations Management

This quiz tests a student's knowledge about Operations Management

Basics of corporate finance

These questions will test you on your knowledge of finance.

View More Free Quizzes
Related BrainMass Solutions

  • Discounted Payback, IRR

    The MARR used for the evaluation should be 12%. a) Which project(s) should be chosen if the discounted payback must be achieved in at least 4 years?

  • MARR of mutually exclusive alternatives

    Using the Present Worth criterion, which alternative should be accepted? b. Using the Internal Rate of Return criterion, which alternative should be accepted?

  • Time Value of Money Utilizing the Present Worth Calculation

    The response is attached. An evaluation of the best bridge to repair using the Present Worth calculation on the minimum acceptable rate of return (MARR).

  • Capital Budgeting Models

    IRR can be found by using IRR function in MS Excel. IRR (Project A1)=23.56% =IRR(B4:B6) IRR (Project A2)=22.22% =IRR(C4:C6) Both projects have higher value of IRR than MARR of 15%. Both can be selected.

  • IRR, MARR & Present Worth - Technology Plus, LLC

    However the highest NPV is for Model 5000, thus Model 5000 should be selected. Shows how to take investment decisions regarding unreliable machine using IRR and NPV methods.

  • Capital Budgeting : NPW and IRR methods

    UAW uses a MARR of 15% and a time span of 5 years for project evaluations. Determine which new product(s) should be chosen using Internal rate of return criteria.

  • Deciding Between New Equipment Options

    Should the company invest in this equipment?  RoR on Project A is higher than MARR of 8%, the project is acceptable. Answer: Yes, the company should invest in this equipment.

  • After tax cash flow, NPV of projects

    The MARR for the owner of this equipment is 10%, their tax rate is 20% and they use DDB depreciation assuming 5-year life and $5,000 salvage value. A - Determine the after tax cash flow of this project.

  • Benefit Cost Ratio (BCR)

    The MARR is 18%. Calculate the Conventional and the Modified BCR for this project. Should this investment be made? Why?

View More Related Solutions