Try Magic Notes and save time.Try it free
Try Magic Notes and save timeCrush your year with the magic of personalized studying.Try it free

Related questions with answers

Question

Amigo Mobility, which manufactures battery-powered mobility scooters, has $700,000 to invest. The company is considering three different battery projects that will yield the following rates of return:$ $\text{Deep cycle = 28\\%} \\ \text{Wet/flooded = 42\\%} \\ \text{Lithium ion = 19\\%}$ $The initial investment required for each project is$200,000, $100,000, and$400,000, respectively. If Amigo’s MARR is 15% per year and it invests in all three projects, what rate of return will the company make?

Solution

Verified
Answered 2 years ago
Answered 2 years ago
Step 1
1 of 2

ROR is calculated as the weighted average of the given rates of return.

ROR=0.28$200,000+0.42$100,000+0.19$400,000$700,000=$174,000$700,000=0.24857=24.857%\begin{align*} ROR &= \frac{0.28 \cdot \$200,000 + 0.42 \cdot \$100,000 + 0.19 \cdot \$400,000}{\$700,000}\\ &= \frac{\$174,000}{\$700,000}\\ &= 0.24857 =24.857\% \end{align*}

Create an account to view solutions

Create an account to view solutions

Recommended textbook solutions

Engineering Economy 7th Edition by Anthony Tarquin, Leland Blank

Engineering Economy

7th EditionISBN: 9780073376301Anthony Tarquin, Leland Blank
1,116 solutions
Engineering Economy 8th Edition by Anthony Tarquin, Leland Blank

Engineering Economy

8th EditionISBN: 9780073523439 (3 more)Anthony Tarquin, Leland Blank
1,233 solutions
Contemporary Engineering Economics 6th Edition by Chan S. Park

Contemporary Engineering Economics

6th EditionISBN: 9780134123929 (4 more)Chan S. Park
302 solutions
Engineering Economic Analysis 14th Edition by Donald G. Newnan, Jerome P. Lavelle, Neal A. Lewis, Ted G. Eschenbach

Engineering Economic Analysis

14th EditionISBN: 9780190074173Donald G. Newnan, Jerome P. Lavelle, Neal A. Lewis, Ted G. Eschenbach
900 solutions

More related questions

1/4

1/7