ECC 426 ENGINEERING ECONOMY
Prof.Dr. Cavit Atalar
ECC426.Ch6.2ch
Rate
of
Return
Analysis
Topics
a Incremental Cash Flow
b ROR EVALUATION OF TWO OR MORE MUTUALLY EXCLUSIVE ALTERNATIVES
c Incremental Cash Flow for Comparison of Different
Machines
- 95,000 – (- 70,000)= - 95,000 + 70,000) = - 25,000
at Year 1 -7,000 – ( -9,000)= -7,000 + 9,000= +2,000
at Year -7,000 – ( -9,000 + 5,000 – 70,000) = -7,000 – (-74,000) =+67,000
at Year 6, (-7,000 + 10,000) = (-9,000 + 5,000) = +3,000 – (-4,000) = +7,000
0= -1,500 + 300(P/A,10%,8) + 400(P/F,10%,8)=
0=-1,500 + 300(5.3349) + 400(0.4665)= -1,500 + 1,600.47 + 186.60 = +287.07
0= -1,500 + 300(P/A,15%,8) + 400(P/F,15%,8)=
0= -1,500 + 300(4.4873) + 400(0.3269)= -1,500 + 1,346.19 + 130.76 = -23.05
0= -1,500 + 300(P/A,14%,8) + 400(P/F,14%,8)=
0= -1,500 + 300(4.6389) + 400(0.3506)= -1,500 + 1,391.67 + 140.24 = + 31.91
31.91 +23.05=54.96 ---100/54.96=1.8195 31.97x1.8196=58 14.00+0.58=14.58
0= -3,500 + 200(P/A,10%,8) - 200(P/F,10%,8)=
0=-3,500 + 200(5.3349) - 200(0.4665)= -3,500 + 1,066.98 - 93.30= -2,526.32
0= -3,500 + 200(P/A,20%,8) - 200(P/F,20%,8)=
0=-3,500 + 200(3.8372) - 200(0.2326)= -3,500 + 767.44 – 46.52= -2.779,08
0= -3,500 + 200(P/A,0%,8) - 200(P/F,0%,8)=
0=-3,500 + 200 - 200= -3.500
0= -8,500 + 1,800(P/A,10%,8) + 100(P/F,10%,8)=
0=-8,500+1,800(5.3349)+100(0.4665)= -8,500 + 9,602.82 + 46.65 = + 1,149.47
0= -8,500 + 1,800(P/A,15%,8) + 100(P/F,15%,8)=
0=-8,500+1,800(4.4873)+100(0.3269)= -8,500 + 8,077.14 + 32.69 = -390,17
0= -8,500 + 1,800(P/A,14%,8) + 100(P/F,14%,8)=
0=-8,500+1,800(4.6389)+100(0.3506)= -8,500 + 8.350,02 + 35.06 =-114,92
0= -8,500 + 1,800(P/A,12%,8) + 100(P/F,12%,8)=
0=-8,500+1,800(4.9676)+100(0.4039)= -8,500 + 8.941,68 + 40.39 =- +482,07
References
[1] Leland Blank and Anthony Tarquin (2011)Engineering Economy 7.th Edition,
McGraw Hill
[2] Leland Blank and Anthony Tarquin (2018)Engineering Economy 8.th Edition,
McGraw Hill
[3] William G. Sullivan, Elin M. Wicks and C. Patrick Koelling (2018) Engineering
Economy 17.th Edition, Pearson
