Your firm is thinking about investing $300 comma 000 in the overhaul of a manufacturing cell in a lean environment. Revenues are expected to be $30 comma 000 in year one and then increasing by $10 comma 000 more each year thereafter. Relevant expenses will be $15 comma 000 in year one and will increase by $7 comma 500 per year until the end of the cell's eight-year life. Salvage recovery at the end of year eight is estimated to be $9 comma 000. What is the annual equivalent worth of the manufacturing cell if the MARR is 8% per year?

c) Investment in a DPP (Direct Participation Program)

Explanation:

Direct Participation Programs are a form of limited partnership. DPP has the lack of liquidity, since ownership interests are not always freely transferrable and require the approval of a general partner of the DPP. Each of the other items listed are more liquid on a short-term basis. Bonds can be sold, bond fund shares can be redeemed, equities are easily sold in the secondary market, and though CDs are not transferrable, the maximum maturity is 1 year or less, so the client would have short-term access to the funds invested.