Consider four mutually exclusive alternatives: A B C D Cost $65 $55 $25 $80 Uniform annual benefit 16.3 15.1 5.2 21.3 Each alternative has a 6-year useful life and no salvage value. The MARR is 9%. Which alternative should be selected, based on (a) The payback period (b) Future worth analysis (c) Benefit-cost ratio analysis
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- Determine which alternative is the most viable by incremental B / C (values in thousands),considering an interest rate of 3%A B C D E FInitial cost 500 550 300 550 500 600Total annual costs $ 360 480 180 600 300 660Annual income $ 550 620 325 900 550 800Against annual profits 300 300 400 300 300 200 ---Methods of economic evaluation of alternatives----Three mutually exclusive alternatives are being considered. A B C Initial Investment $50,000 $22,000 $15,000 Annual Net Income $5,093 $2,077 $1,643 Rate of Return 8% 7% 9% Each alternative has a 20-year useful life with no salvage value. If the MARR is 7%, which alternative should be selected? (ANS: ∆IRRB-C=2.14%, Eliminate B, ∆IRRA-C=7.56%, Select A) How do you work this out?Here, for an alternative with an initial cost of $350 and an annual benefit of $47.50 that increases by $10 each years. use a 8-year useful life and an 6%MARR to calculate: A. Future worth? B. Standard Benefit-cost Ratio? (Find both)
- A major equipment purchase is being considered by Metro Atlanta. The initial cost is determined to be $1,000,000. It is estimated that this new equipment will save $100,000 the first year and increase gradually by $50,000 every year for the next 6 years. MARR=10% a. Using Benefit- Cost analysis, what is the Benefit/Cost ratio for this equipment purchase? b. Based on the Benefit/Cost analysis should Metro Atlanta purchase the equipment?A firm is considering two alternatives that have no salvage value. A B Initial cost $9000 $4700 Uniform annual benefits 1400 1650 Useful life, in years 10 5 At the end of 5 years, another B may be purchased with the same cost, benefits, and so forth. (a) Graph the EUAC or EUAW for the alternatives. Construct a choice table for interest rates from 0% to 100%. (b) If the MARR is 15%, which alternative should be selected? please solve it in Excel & show me all the steps■Consider the following four mutually exclusive alternatives, each with a 10-yr life. X Y Z $4,000 $1,500 $750 710 300 167.5 Cost If the MARR is 10%, which alternative should be selected? Solve the problem by using: Uniform annual benefit a) The payback period b) Benefit-cost ratio analysis
- Compare the following alternatives using a method of your choice. Rate 3.5% per year compounded monthly. Construction $ Benefits $/yr Maintenance $/yr Life years A 2,500,000 450,000 75,000 12 B 1,750,000 400,000 60,000 9QZY, Inc. is evaluating new widget machines offered by three companies. The chosen machine will be used for 3 years. a) Construct a choice table for interest rates from 0% to 100%. B) MARR = 15%. From which company if any should you buy the widget machine? Use rate of return analysis. A B C First cost $15,000 $25,000 $20,000 Maintenance and operating 1,600 400 900 Annual benefits 8,000 13,000 9,000 Salvage value 3,000 6,000 4,500 a) Construct a choice table for interest rates from 0% to 100% b) MARR = 15%. From which company if any should you buy the widget machine? Use rate of return analysis1.b You are faced with a decision on an investment proposal. Specifically, the estimated additional income from the investment is $125,000 per year; the investment cost is $400,000; and the first year estimated expense of $20,000 and will increase a rate of 5% per year. Assume an 8-year analysis period, no salvage value, and MARR = 15% per year. What is the ERR ( Ԑ=MARR) of this proposal? show whole solution, not in excel please
- Any help would be appreciated! Given the data for three different alternatives in the table below, determine the best alternative using the incremental rate of return (∆RoR) analysis. MARR =9%. A B C First cost $15,000 $25,000 $20,000 O &M Cost/ year 1,600 400 900 Benefit/year 8,000 13,000 9,000 Salvage value 3,000 6,000 4,600 Life in years 4 4 4 1. The better alternative between the first increment is ________________. A. Alt. A or Alt. B B. Alt. A C. Alt.C D. Alt. B 2. The better alternative between the second increment is ___________________. A. Alt. B or Alt. C B. Alt. B C. Alt. C D. Alt. AA project is being planned that has an initial investment at time 0, annual revenuesand expenses, and a salvage value at the end of the project lifespan (20 years). The financialvalues are summarized below:Initial investment amount at time 0 $150,000Estimated annual revenue $34,500 per yearEstimated annual expenses $8,700 per yearEstimated salvage value at end of lifespan $10,000Minimum attractive rate of return (MARR) 15%a. Calculate the capital recovery amount CR(i%).b. Using the annual worth (AW) method, determine whether purchasing the equipmentis economically justified.c. Repeat part (a) using the internal rate of return (IRR) method based on annual worth(AW).d. Using the present worth (PW) method, determine the break-even time period afterwhich purchase of the equipment generates a profit. (Find N when PW = 0) year period.An engineering firm has identified five ways to cut costs in its main office. Only one of the options can be implemented, however, since each involves significant training time for staff engineers. Data are provided in the table. Each option has a lifetime of seven years, and the firm sets a MARR at 15%. Option A B C D E Capital cost ($ million) 2.713 0.375 1.650 0.088 0.950 Annual cost ($ million/yr 0.093 0.275 0.132 0.147 0.228 Annual benefit ($ million/yr) 0.890 0.288 0.841 0.312 0.505 a) Solve by present worth analysis. b) Solve by annual cash flow analysis. c) Solve by incremental benefit-cost ratio analysis. d) Solve by an incremental rate of return analysis using the full detailed procedure