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When comparing multiple alternatives, the DPBP can lead to wrong conclusions regarding the maximum economic worth. True or False?
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- Data in the matrix below indicates COST expected from 3 alternatives under 4 states of nature. Determine which alternative is dominant using With and Without Probability Use every methodLet PW(A) be the present worth of investment alternative A, PW(B) be the present worth of investment alternative B, B/C(A) be the benefit-cost ratio for investment alternative A, and B/C(B) be the benefitcost ratio for investment alternative B. If PW(A) > PW(B) > $0, which of the following answers is correct? a) B/C(A) > B/C(B); b) B/C(A) > B/C(B) > 1.0; c) B/C(A) > 1.0 and B/C(B) > 1.0; d) insufficient information available to answeronly need options d) and e)
- Comparison of five mutually exclusive alternatives is shown. One must be accepted. According to the B/C ratio, which alternative should be selected (costs increase from A to E). AB/C Comparison Ratio A versus B 0.75 B versus C 1.4 C versus D 1.3 A versus C 1.1 A versus D 0.2 B versus D 1.9 C versus E 1.2 D versus E 0.9 O a. B O b. D Ос. А O d. E O e. CThe estimated negative cash flows for three design alternatives are shown below. The MARR is 14% per year and the study period is five years. Which alternative is best based on the IRR method? Doing nothing is not an option. Capital investment Annual expenses EOY 0 A. Alternative C B. Alternative B OC. Alternative A 1-5 CLEAN A $81,500 7,500 Alternative B $64,400 12,620 Which alternative would you choose as a base one? Choose the correct answer below. Analyze the difference between the base alternative and the second-choice alternative. C $71,000 10,420Problem 1 Two mutually exclusive alternatives are being considered for a site equipment at a petroleum refinery. One of these alternatives must be selected. The firm's MARR is 9% per year. The estimated cash flows for each alternative are below. If the repeatability assumption is made, which alternative is better and what is the AW of the selected alternative? Please round your answer to the nearest integer. Equipment A: • Investment Cost: $77,000 • Annual Revenue: $21,000 • Market Value: $11,000 Useful Life: 9 Years Equipment B: Investment Cost: $28,000 • Annual Revenue: $20,000 • Market Value: $8,000 • Useful Life: 6 Years