Six mutually exclusive projects A, B, C, D, E, and F, are being considered by ABC Inc. They all have 20 years of project life and have been ordered by first costs so that project A has the lowest first cost, project F the largest. Specifically, detailed cash flows for Projects A is given below. Project A: Initial Cost of $630,000. annual benefit of $70,000 for 20 years The table below apply to all projects (A through F). The data can be interpreted as follows: the IRR on the incremental investment from project C to D is 11.8%. Which project should be chosen using MARR of 12%? IRR on overall IRR on Increments of Investment Project Compared With Project Investment A B D E A 11.80% 12.50% 12.30% 11.00% 11.20% 12.1% 13.0% 12.2% 12.2% D 11.8% 12.1% 7% E F 14% 10% 11,5% 11.2% 9.8% 9.7% 9% 8.50% O Project B O Project C O Project D O Project E O Project F

Six mutually exclusive projects A, B, C, D, E, and F, are being considered by ABC Inc. They all have 20 years of project life and have been ordered by first costs so that project A has the lowest first cost, project F the largest. Specifically, detailed cash flows for Projects A is given below. Project A: Initial Cost of $630,000. annual benefit of $70,000 for 20 years The table below apply to all projects (A through F). The data can be interpreted as follows: the IRR on the incremental investment from project C to D is 11.8%. Which project should be chosen using MARR of 12%? IRR on overall IRR on Increments of Investment Project Compared With Project Investment A B D E A 11.80% 12.50% 12.30% 11.00% 11.20% 12.1% 13.0% 12.2% 12.2% D 11.8% 12.1% 7% E F 14% 10% 11,5% 11.2% 9.8% 9.7% 9% 8.50% O Project B O Project C O Project D O Project E O Project F

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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