For the following alternatives compute the Delta B/C ratio of Alternative D minus Alternative A.Use 11% as MARR. (Remember for our convention, salvage value is a minus cost.)ProjectABDInitial Investment-1500-2000-2500-5200Annual Benefit350500600850Salvage ValueUseful Life32061082023005679

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Description: For the following alternatives compute the Delta B/C ratio of Alternative D minus Alternative A.Use 11% as MARR. (Remember for our convention, salvage value is a minus cost.)ProjectABDInitial Investment-1500-2000-2500-5200Annual Benefit350500600850S

B/C ratio is the present value of cash flow to the initial investment of the project considering the…

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r the following alternatives compute the Delta B/C ratio of Alterna e 11% as MARR. (Remember for our convention, salvage value is a pject A B D tial Investment -1500 -2000 -2500 -5200 nual Benefit 350 500 600 850 vage Value 320 610 820 2300

r the following alternatives compute the Delta B/C ratio of Alterna e 11% as MARR. (Remember for our convention, salvage value is a pject A B D tial Investment -1500 -2000 -2500 -5200 nual Benefit 350 500 600 850 vage Value 320 610 820 2300

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 9PA: Pitt Company is considering two alternative investments. The company requires a 12% return from its...

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Use the following alternatives to develop an incremental analysis choice table and answer the following questions. Alternative A Initial Cost - $15,000 Annual Revenue (Year 1-15) - $2500 Salvage Benefit (Year 15) - $2000 Alternative B Initial Cost - $25,000 Annual Revenue (Year 1-15) - $3500 Salvage Benefit (Year 15) - $5000 1. Determine the incremental rate of return IRRHigh-Low. Provide your answer as a percentage and round to the nearest hundredth. 2. Determine the internal rate of return for the higher cost alternative IRRHigh. Provide your answer as a percentage and round to the nearest hundredth. 3. Determine the internal rate of return for the lower cost alternative IRRLow. Provide your answer as a percentage and round to the nearest hundredth. Please answer all 3.
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Use the incremental ROR analysis to select the one economically best project for a 10% MARR. Project A B C D Initial Cost -200,000 -275,000 -190,000 -350,000 Salvage Value +22,000 +35,000 +19,500 +42,000 Life 5 5 5 5
Calculate the modified benefit-cost ratio for the alternative: Initial Investment Cost 350000 Revenues 150000 Costs 55000 Salvage 120000 n 7 MARR 0.1 Select one: a. 1.4599 b. 1.4101 c. 1.7354 d. 1.6035 e. 1.6480
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Any suggestions? Thanks for the help! 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 ________________. 2. The better alternative between the second increment is ___________________.
You have been tasked to conduct a conventional B/C analysis for a security system upgrade at your organization. Using a discount rate of 9% p.a. and the data provided below, determine if the project is justified. Item Cash Flow First cost, $ 25,000 AW of benefits, $/year 3,800 FW of disbenefits, year 20, $ 6,750 O&M costs, $/year 400 Life, years 20
Alternative I has a first cost of $50,000, will produce an $18,000 net annual benefit over its 10-year life and be salvaged for $5,000. Alternative II costs $150,000 and has a salvage value of $50,000 after its 10-year useful life. If interest is 15%, what is the minimum amount of annual benefit that Alternative II must produce to make it the preferred choice? (a) This value can not be determined from the data given. (b) $23,500 (c) $31,450 (d) $35,708?
Suppose the CFO wants you to do a scenario analysis with different values for the cost savings, the machine's salvage value, and the working capital (WC) requirement. She asks you to use the following probabilities and values in the scenario analysis: Scenario Probability Cost Savings Salvage Value WC Worst case 0.35 $ 88,000 $28,000 $40,000 Base case 0.35 110,000 33,000 35,000 Best case 0.30 132,000 38,000 30,000 Calculate the project's expected NPV, its standard deviation, and its coefficient of variation. Do not round intermediate calculations. Round the monetary values to the nearest dollar and a coefficient of variation to two decimal places. Negative values, if any, should be indicated by a minus sign. The project's expected NPV: $ Standard deviation: $ Coefficient of variation:
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A firm is considering three mutually exclusive alternatives as part of a production improvement program. The alternatives are as follows: A B C Installed cost $8,000 $12,000 $16,000 Uniform annual benefit 1,600 1,750 2,050 Useful life, in years 10 20 20 For each alternative, the salvage value at the end of useful life is zero. At the end of 10 years, Alt. A could be replaced by another A with identical cost and benefits. (a)Construct a choice table for interest rates from 0% to 100%. (b)The MARR is 12%. If the analysis period is 20 years, which alternative should be selected?
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