Engineering Economy
16th Edition
ISBN: 9780133582819
Author: Sullivan
Publisher: DGTL BNCOM
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Textbook Question
Chapter 6, Problem 80FE
For the following table, assume a MARR of 10% per year and a useful life for each alternative of six years that equals the study period. The rank-order of alternatives from least capital investment to greatest capital investment is Do Nothing
→ A → B → C → B.
Complete the
- a. Do Nothing
- b. Alternative A
- c. Alternative B
- d. Alternative C
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Students have asked these similar questions
The following five alternatives that are evaluated by the rate of return method, If the alternatives are independent and the MARR is 15% per year, the onels) to select is (are)
Incremental ROR, N.
When Compared with
Alternative
Initial
Investment,S
Alternative
Alternative
A BC DE
10.6
27.3
194
353 25.0
-25,000
-35,000
13.1
38.5
24.4
-40,000
13.4
46.5
27.3
26.8
-60,000
25.4
-75,000
20.2
Only D
O Only D and E
O Only A D, and E
O Only E
Alternative A and B are two mutually exclusive cost alternatives, and one of them must be
selected. Using Incremental Analysis, which of the alternatives should be recommended based on
ERR (the External Rate of Return)? ·
MARR (Minimum acceptable rate of return) is 12% per year while the re-investment rate is
10% per year.
The study period is 20 years. Assume repeatability is appropriate for this comparison.
Alternative
A
B
$ (101,000)
$ (6,000)
20 years
$ (6,000)
$ (18,500 )
10 years
Initial capital investment
Annual operating expenses
Useful life
Salvage value
None
None
If the IRR of Alternative A is 10%, the IRR of Alternative B is 8% and the MARR is
6%, which of the following is true?
OAlternative B is preferred over Alternative A
Alternative A is preferred over Alternative B
Both alternatives are preferred over the do nothing alternative
Both b and c are true
Chapter 6 Solutions
Engineering Economy
Ch. 6 - Prob. 1PCh. 6 - The Consolidated Oil Company must install...Ch. 6 - Prob. 3PCh. 6 - Three mutually exclusive design alternatives are...Ch. 6 - Prob. 5PCh. 6 - Prob. 6PCh. 6 - Fiesta Foundry is considering a new furnace that...Ch. 6 - Prob. 8PCh. 6 - Prob. 9PCh. 6 - Consider the following cash flows for two mutually...
Ch. 6 - Prob. 11PCh. 6 - Prob. 12PCh. 6 - The alternatives for an engineering project to...Ch. 6 - Prob. 14PCh. 6 - Prob. 15PCh. 6 - Prob. 16PCh. 6 - Refer to the situation in Problem 6-16. Most...Ch. 6 - Prob. 18PCh. 6 - Prob. 19PCh. 6 - Prob. 20PCh. 6 - Prob. 21PCh. 6 - Prob. 22PCh. 6 - Prob. 23PCh. 6 - Prob. 24PCh. 6 - Prob. 25PCh. 6 - In the Rawhide Company (a leather products...Ch. 6 - Refer to Problem 6-2. Solve this problem using the...Ch. 6 - Prob. 28PCh. 6 - Prob. 29PCh. 6 - Prob. 30PCh. 6 - Prob. 31PCh. 6 - Prob. 32PCh. 6 - Prob. 33PCh. 6 - Potable water is in short supply in many...Ch. 6 - Prob. 35PCh. 6 - Prob. 36PCh. 6 - In the design of a special-use structure, two...Ch. 6 - Prob. 38PCh. 6 - a. Compare the probable part cost from Machine A...Ch. 6 - Prob. 40PCh. 6 - Two mutually exclusive alternatives are being...Ch. 6 - Prob. 42PCh. 6 - IBM is considering an environmentally conscious...Ch. 6 - Three mutually exclusive earth-moving pieces of...Ch. 6 - A piece of production equipment is to be replaced...Ch. 6 - Prob. 46PCh. 6 - Prob. 47PCh. 6 - Prob. 48PCh. 6 - Prob. 49PCh. 6 - Prob. 50PCh. 6 - Prob. 51PCh. 6 - Prob. 52PCh. 6 - Prob. 53PCh. 6 - Prob. 54PCh. 6 - Prob. 55PCh. 6 - Prob. 56PCh. 6 - Prob. 57PCh. 6 - Prob. 58PCh. 6 - Prob. 59PCh. 6 - Prob. 60PCh. 6 - Prob. 61PCh. 6 - Prob. 62PCh. 6 - Prob. 63PCh. 6 - Prob. 64PCh. 6 - Prob. 65PCh. 6 - Prob. 66PCh. 6 - Three models of baseball bats will be manufactured...Ch. 6 - Refer to Example 6-3. Re-evaluate the recommended...Ch. 6 - Prob. 69SECh. 6 - Prob. 70SECh. 6 - Prob. 71SECh. 6 - Prob. 72CSCh. 6 - Prob. 73CSCh. 6 - Prob. 74CSCh. 6 - Prob. 75FECh. 6 - Prob. 76FECh. 6 - Prob. 77FECh. 6 - Complete the following analysis of cost...Ch. 6 - Prob. 79FECh. 6 - For the following table, assume a MARR of 10% per...Ch. 6 - Prob. 81FECh. 6 - Problems 6-82 through 6-85. (6.4) Table P6-82 Data...Ch. 6 - Prob. 83FECh. 6 - Problems 6-82 through 6-85. (6.4) Table P6-82 Data...Ch. 6 - Problems 6-82 through 6-85. (6.4) Table P6-82 Data...Ch. 6 - Consider the mutually exclusive alternatives given...Ch. 6 - Prob. 87FE
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