3. Mr. Decision is torn between two independent projects A and B. The data below each project are given and the MEAS under each project are also given. Take MARR = 12% for all projects. A. Perform the proper evaluation of all the projects available. B. Recommend the project(s) that can be selected from the list so you can help Mr. Decision to decide. C. Explain the method(s) of evaluation you used including the assumption(s) made. PARAMETERS MEA 1 MEA 2 MEA 3 МEA 4 Investment Cost 1,500,000 1,000,000 2,000,000 2,500,000 Annual Service Benefit 200,000 200,000 150,000 115,000 Annual Insurance Benefit 300,000 150,000 200,000 Annual Maintenance and 120,000 100,000 500,000 200,000 Operational Costs Annual Revenues 90,000 100,000 110,000 90,000 Market Value 100,000 90,000 200,000 IIseful Life vears 10 5. PROJECT A

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question
3.
Mr. Decision is torn between two independent projects A and B. The data below each project are
given and the MEAS under each project are also given. Take MARR = 12% for all projects.
A. Perform the proper evaluation of all the projects available.
B. Recommend the project(s) that can be selected from the list so you can help Mr. Decision to decide.
C. Explain the method(s) of evaluation you used including the assumption(s) made.
PARAMETERS
MEA 1
МЕA 2
MEA 3
МEA 4
Investment Cost
1,500,000
1,000,000
2,000,000
2,500,000
Annual Service Benefit
200,000
200,000
150,000
115,000
Annual Insurance Benefit
300,000
150,000
200,000
Annual Maintenance and
120,000
100,000
500,000
200,000
Operational Costs
Annual Revenues
90,000
100,000
110,000
90,000
Market Value
100,000
90,000
200,000
Useful Life, years
10
8
5
4
МEA 5
МEA 6
200,000
10,000
16,000
PARAMETERS
MEA 7
МEA 8
Investment Cost
Annual Service Benefit
100,000
10,000
30,000
300,000
15,000
500,000
11,000
10,000
Annual Insurance Benefit
Annual Maintenance and
Operational Costs
Annual Revenues
50,000
60,000
40,000
90,000
90,000
9,000
100,000
6,000
110,000
10,000
90,000
15,000
Market Value
Useful Life, years
6
PROJECT B
PROJECT A
Transcribed Image Text:3. Mr. Decision is torn between two independent projects A and B. The data below each project are given and the MEAS under each project are also given. Take MARR = 12% for all projects. A. Perform the proper evaluation of all the projects available. B. Recommend the project(s) that can be selected from the list so you can help Mr. Decision to decide. C. Explain the method(s) of evaluation you used including the assumption(s) made. PARAMETERS MEA 1 МЕA 2 MEA 3 МEA 4 Investment Cost 1,500,000 1,000,000 2,000,000 2,500,000 Annual Service Benefit 200,000 200,000 150,000 115,000 Annual Insurance Benefit 300,000 150,000 200,000 Annual Maintenance and 120,000 100,000 500,000 200,000 Operational Costs Annual Revenues 90,000 100,000 110,000 90,000 Market Value 100,000 90,000 200,000 Useful Life, years 10 8 5 4 МEA 5 МEA 6 200,000 10,000 16,000 PARAMETERS MEA 7 МEA 8 Investment Cost Annual Service Benefit 100,000 10,000 30,000 300,000 15,000 500,000 11,000 10,000 Annual Insurance Benefit Annual Maintenance and Operational Costs Annual Revenues 50,000 60,000 40,000 90,000 90,000 9,000 100,000 6,000 110,000 10,000 90,000 15,000 Market Value Useful Life, years 6 PROJECT B PROJECT A
Expert Solution
steps

Step by step

Solved in 3 steps with 9 images

Blurred answer
Knowledge Booster
Optimal Capital Budget
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education