After 15 years of employment in the airline indus­try, John started his own consulting company to use physical and computer simulation in the analy­sis of commercial airport accidents on runways. He estimates his average cost of new capital at 8% per year for physical simulation projects, that is, where he physically reconstructs the accident using scale versions of planes, buildings, vehicles, etc. He has established 12% per year as his MARR. What net rate of return on capital investments for physical simulation does he expect?

What will be an ideal response?


12 - 8 = 4% per year

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What will be an ideal response?

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