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. PARAMETERSМEA 1МЕА 2МEА ЗМEA 4Investment Cost1,500,0001,000,0002,000,0002,500,000Annual Service Benefit200,000200,000150,000115,000Annual Insurance Benefit300,000150,000200,000Annual Maintenance and120,000100,000500,000200,000Operational CostsAnnual Revenues90,000100,000110,00090,000Market Value100,00090,000200,000Useful Life, years1084PARAMETERSМEA 5МEA 6МЕA 7МEA 8200,00010,00016,000Investment Cost100,00010,000300,00015,000500,00011,00010,000Annual Service BenefitAnnual Insurance Benefit30,000Annual Maintenance and50,00060,00040,00090,000Operational CostsAnnual Revenues90,00090,0009,000100,0006,0006110,000Market Value10,00015,000Useful Life, yearsPROJECT BPROJECT A

Given information There are 4 MEA in project 1 and 4 MEA in project B MARR=12%

Answered: Mr. Decision is torn between two…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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
МEA 1
МЕА 2
МEА З
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
4
PARAMETERS
МEA 5
МEA 6
МЕA 7
МEA 8
200,000
10,000
16,000
Investment Cost
100,000
10,000
300,000
15,000
500,000
11,000
10,000
Annual Service Benefit
Annual Insurance Benefit
30,000
Annual Maintenance and
50,000
60,000
40,000
90,000
Operational Costs
Annual Revenues
90,000
90,000
9,000
100,000
6,000
6
110,000
Market Value
10,000
15,000
Useful Life, years
PROJECT B
PROJECT A

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