College of Engineering

Engineering Economics
ENG 412

Solution of Class Activities and

Tutorial
RoR Lecture
 Class Activity 1
Based on the following cash flow with MARR is 10%.
Determine IRR and ERR. Are you going to accept the
project?

Assume (i) = 0%; NPV= $40

Solution:
Assume (i) = 10%; NPV= $5
Therefore, This project is not acceptable, and no need to
determine indices because:
1. No negative sign of NPV is determined for any (i).
2. It is not logical to invest in a project given very small amount of
NPV
2
 Class Activity 2
1. Brock Associates invested $80,000 in a business venture with the
following cash flow results:

If MARR is 12%, determine the following:

a. NPV
b. NAV
c. NFV
d. EROR
e. IRR
f. ERR

3
Solution:

a. NPV = $13,447.60
b. NAV = $2,707.04
c. NFV = $33,295.77
d. EROR = N.A
e. IRR = 16.54%
f. ERR = 14.20%
Details
4
Solution of Tutorial Questions
RoR Lecture
4.8
4.9
4.10