4. A rate of return analysis was conducted for the following alternatives, based on the tablebelow.G-20,000 -30,000 -50,000-80,000Investment Amount, $i* ROR, %Revenue, $2035252010,500 12,50016,0004,000E vs.Machines ComparedDNF vs. EG vs FH vs FAi* Incremental Analysis,20651011a) If the proposals are independent, which should be selected when the MARR is 20% per year.b) If the proposals are mutually exclusive, which should be selected when the MARR is 16% peryear.c) If the proposals are mutually exclusive, which should be selected when the MARR is 11% peryear.d) Based on the top two i* values, a selection must be made based on the MARR of 12% peryearTo receive full credit, for part a- d ensure you indicate for each incremental step why theyare being eliminated &/or selected.

A rate of return analysis was conducted for the following alternatives, based on the table below. Investment Amount, $ -20,000 -30,000 -50,000 -80,000 i* ROR, % 20 35 25 20 Revenue, $ 16,000 4,000 E vs. 10,500 12,500 G vs F H vs F Machines Compared Ai* Incremental Analysis, DN F vs. E 20 65 10 11

A rate of return analysis was conducted for the following alternatives, based on the table below. Investment Amount, $ -20,000 -30,000 -50,000 -80,000 i* ROR, % 20 35 25 20 Revenue, $ 16,000 4,000 E vs. 10,500 12,500 G vs F H vs F Machines Compared Ai* Incremental Analysis, DN F vs. E 20 65 10 11

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

4. A rate of return analysis was conducted for the following alternatives, based on the table
below.
G
-20,000 -30,000 -50,000
-80,000
Investment Amount, $
i* ROR, %
Revenue, $
20
35
25
20
10,500 12,500
16,000
4,000
E vs.
Machines Compared
DN
F vs. E
G vs F
H vs F
Ai* Incremental Analysis,
20
65
10
11
a) If the proposals are independent, which should be selected when the MARR is 20% per year.
b) If the proposals are mutually exclusive, which should be selected when the MARR is 16% per
year.
c) If the proposals are mutually exclusive, which should be selected when the MARR is 11% per
year.
d) Based on the top two i* values, a selection must be made based on the MARR of 12% per
year
To receive full credit, for part a- d ensure you indicate for each incremental step why they
are being eliminated &/or selected.

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