Which alternative in the table below should be selected when the MARR =7% per year? The life of each alternative is 10 years.A(A - DN)A(B - A)$700A(C - B)$1,100Increment ConsideredA(D - C)$1.300A Investment costA (Annual Revenues lessCosts)$800$140$108$161$130IRR on A Investment Cost11.7%8.8%?The IRR on A(C - B) is || %. (Round to one decimal place.)

Given MARR = 7 % Time = 10 years Increamental difference (C-B) investment cost = 1100 Incremental…

Answered: Which alternative in the table below…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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You invested $100,000 in a project and received $40,000 at n = 1, $40,000 atn = 2, and $30,000 at n = 3 years. You need to terminate the project at the end of year 3. Your interest rate is 10%; what is the project balance at the time of termination?(a) Gain of $10,000(b) Loss of $8,039(c) Loss of $10,700(d) Just break even
Alternative X Alternative Y Capital Investment Useful life $5,000 20 $200 $6,000 15 $800 in year 10 and decreasing by a constant amount of $50 per year Annual Expenses thereafter Salvage Value $1,000 (a) What is the annual worth (AW) of alternative X? Show all the steps of calculation. (4 marks) (b) What is the annual worth (AW) of alternative Y? Show all the steps of calculation. (5 marks) (c) Based on your answers in part (a) and (b), explain which alternative should be selected. (2 marks) LE10 Mec)
Identify the net cash flows shown below as either conventional or nonconventional. Year 0 1 2 3 4 5 (a) 400 300 200 100 0 −100 (b) −50 −50 −50 40 40 40 (c) −1000 200 300 400 300 200 (d) −6000 −500 −500 −750 10,000 −2000 (e) 50 −10 50 50 50 50
Solve this problem in Excel. The following two alternatives are mutually exclusive. (a) Which one will you select if your MARR is 15% per year? Use rate of return analysis. (b) Graph interest rate vs. present value for both option 1 and 2. ( c) Discuss how your selection between option 1 and 2 will change when MARR is changed and at which interest rate the two options are the same economically. Alternative Initial Cost Annual Benefit Life, years Ordinary (O) $38,000 $9,400 5 Above average (AA) $35,000 $9,000 6
Answer (c) (i) and (ii) only
The General Hospital is evaluating new office equipment offered by three companies. Cost Annual benefit End of useful life salvage value Useful life (yrs) Select one: 9.5% 8.5% 7.5% Company A $500 $130 $0 10.5% 5 The incremental rate of return between Company B and Company C is close to Company B $600 $115 $250 5 Company C $700 $100 $180 10
Example A company is considering two types of equipment for its manufacturing plant. Pertinent data are as follows: Freeze Type A Type B First cost P200,000 P300,000 Annual Operating Cost P32,000 P24,000 D Annual Labor Cost P50,000 P32,000 Insurance and Property Taxes 3% 3% Payroll Taxes 4% 4% Estimated Life TO 10 If the minimum required rate of return is 15%, which equipment should be selected?
12.9 A three-year maintenance contract for a local computer network costs $4000. The network is expected to be needed for fifteen years and the maintenance contract will be purchased for the same price at the beginning of every three year period. If the interest rate is 6%, the present equivalent cost of the maintenance contract is nearest: (A) $12,950 (B) $14,500 (C) $15,400 (D) $16,000
MARR = 30% B. -12,000 5,000 2,500 Initial Investment -18,000 Estimated net income per year: 7.000 3,000 Salvage value Estimated competitive life, years (a) Perform incremental ROR analysis (b) Develop the PW vs. i graphs for each alternative and for the increment. (c) Create Choice Table.
Question 4 Complete the following analysis of cost alternatives and select the preferred alternative. The study period is 10 years and the MARR = 12% per year. "Do Nothing" is not an option. A B C D $15,000 $16,000 $13,000 $18,000 Capital investment Annual costs 250 300 500 100 Market value 1,000 1,300 1,750 2,000 at EOY 10 FW(12%) -$49.975-$53,658 ???-$55,660
select projects options are 3, 2, 1&3, 2&3, or 1&2
You wish to evaluate four independent projects that all have a 10-year life at MARR = 15% per year. Preliminary estimates for first cost, annual net income, and SV have been made. A B C D First cost, $ −1,200 −2,000 −5,000 −7,000 Annual net income, $/year 200 400 1100 1300 Salvage value, $ 5 6 8 7 (a) Accept or reject each project using a present worth analysis. On your spreadsheet, include the logical IF function to make the accept/ reject decision. (b) The preliminary estimates have changed for projects A and B as shown below. Use the same spreadsheet to reevaluate them. A B First cost, $ −1,000 −2,200 Annual net income, $/year 300 440 Salvage value, $ 8 0

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