6.Given the following information determine the IRR and compare it with a MARR of 55%. Based on the IRR and the MARR, should this project be executed?
- Initial Cost == $2,550,000
- Life = 10 years
- Salvage Value == $0
- Annual Receipts == $700,000
- Annual Disbursements == $34,500
The following data was obtained from a project to design a new software package, assume that the activities can be crashed as shown: Note you do not have to use the crash formula to find the Crash cost per day it is given in this problem. You will have to determine the number of crash days for each activity.
| Activity |
Duration |
Predecessor |
Crash Time |
Normal Cost |
Crash cost per Day |
|
A |
3 Days |
None |
2 |
$500 |
$500 |
|
B |
6 Days |
None |
2 |
$1,000 |
$1,000 |
|
C |
4 Days |
A |
1 |
$750 |
$250 |
|
D |
2 Days |
C |
0 |
$2,000 |
None |
|
E |
3 Days |
A |
1 |
$1,800 |
$1,200 |
|
F |
2 Days |
D,E |
1 |
$3,250 |
$750 |
Develop the functional relationship between the direct cost of this project and its duration.
Note you do not have to calculate the crash cost per day it has been given to you.
