The following data is available for three different alternatives. The do nothing is an available option. Alternative A Alternative B Alternative C Initial Cost ($) 20,000 15,000 10,000 Uniform Annual Benefits ($) 6607 7,500 3,000 Uniform Annual Cost ($) 1,000 1,500 700 Useful Life (Years) 5. 10 Alternatives B and C can be replaced at the end of their useful lives with identical replacements. The interest rate is 15%. Using appropriate analysis period to compare the alternatives, find the net present worth of Alternative A (NPWA). Note: Round your answer to two decimal places (ex.: 2363.24)

The following data is available for three different alternatives. The do nothing is an available option. Alternative A Alternative B Alternative C Initial Cost ($) 20,000 15,000 10,000 Uniform Annual Benefits ($) 6607 7,500 3,000 Uniform Annual Cost ($) 1,000 1,500 700 Useful Life (Years) 5. 10 Alternatives B and C can be replaced at the end of their useful lives with identical replacements. The interest rate is 15%. Using appropriate analysis period to compare the alternatives, find the net present worth of Alternative A (NPWA). Note: Round your answer to two decimal places (ex.: 2363.24)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Using benefit–cost ratio analysis, determine which one of the three mutually exclusive alternatives should be selected. Each alternative has a 10-year useful life. Assume a 20% MARR.
You are asked to evaluate ergonomic interventions for your company based on the following projections: Decreased annual Workers' Compensation costs: $13, 060 Increased annual production: $17,501 Initial purchase costs: $4, 561 If you have an expectation of 3.75% interest over a 6-year period, what would you calculate the multiplier for the Worker's Comp equivalence calculation to be if you're asked to evaluate the future worth over the life of the project?
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?
The annual-equivalent after-tax costs of retaining a defender over its three-year remaining life and the annual equivalent operating costs for its challenger over its four-year physical life are as follows: Assume an MARR of 12% and determine the optimal replacement time forthe defender. Assume an infinite planning horizon and no technological change (cost) in the challenger. What would be your decision?(a) Replace now(b) Replace one year later(c) Replace two years later(d) Replace three years later
Three mutually exclusive alternative public-works projects are currently underconsideration. Their respective costs and benefits are included in the table that follows. Each of the projects has a useful life of 50 years, and MARR is 10% per year. Which, if any, of these projects should be selected? Solve by hand and by spreadsheet.
‏A firm is considering three mutually exclusive alternatives as part of a production improvement program . The alternatives are : Alternative A ( i = 12 % ) B ( i = 10 % ) C ( i = 15 % ) Installation Cost ( U ) 200,000 270,000 190,000 Uniform Annual 30,750 40,500 30,250 Benefit ( U ) Useful life in years 12 15 14 Which of the above should be chosen
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Dorf Motors Manufacturing must replace one of its tow motors. The net present cost of Alternative A is $8956, Alternative B is $5531, and Alternative C is $4078. Alternative A is expected to last for 12 years; Alternative B has an expected life of 7 years; and Alternative C is expected to last for 5 years. If Dorf’s MARR is 5%, which Alternative (if any) should be chosen using EUAC.
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If the alternatives are independent and the MARR is 15% per year, the one(s) that should be selected is (are):a. only Db. only D and Ec. only B, D, and Ed. only E
An engineer initiated a rate of return analysis for the infinite-life revenue proposals detailed below, but was unable to complete the evaluation.a. Fill in the eleven blanks in the table.b. What proposal(s) should be selected if they are independent and the MARR is 21% per year?c. What proposal should be selected if they are mutually exclusive and the MARR is 13% per year.

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