A company is trying to determine if an investment is worthwhile, but they don't know future,...

A company is trying to determine if an investment is worthwhile, but they don't know future, so they have had 3 independent people develop their scenarios for analysis. In each case, the project will cost $11,000,000 and have a 20 year-life. Analyst #1 Scenario: Gross Income $3,000,000 starting in year 1, increasing by 20% per year to year 5, then leveling off at that number. Analyst #2 Scenario: Gross Income Yr. 1 = $2,000,000, Yr. 2 = $4,000,000, Yrs 3-20 = $6,000,000, Analyst 3 Scenario: Gross Income yr. 1 - $5,000,000, Yr. 2- 10 = Increase by $500,000 per year and steady after that. Since no one knows which analyst is right, expect them all to be equal. Would you recommend this project at a MARR of 13.5% or not? Why?

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jeff jeffy answered 2 years ago

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