Question

3.8 (a) If a small prototyping company invested $25,000 in a new plasma cutting table that results in extra profit that is expected to be $6,250 per year, then the what length of time is required to recover the investment at a Minimum Attractive Rate of Return (MARR) rate of i=18%? (b) Re-calculate the number of periods using the Excel NPER function and record your cell entry and end result.

Answer 1

ANSWER:

In excel when we use the nper function we get n = 7.6909

in excel we use =nper(rate,pmt,pv,fv,type)

rate = 18%

pmt = 6,250

pv = -25,000

fv = 0

type = 0

=nper(18%,6250,-25000,0,0)

= 7.6909

NPER

7.690964532

so the no of years is 7.69