2. Three mutually exclusive earth-moving pieces of equipment are being considered for severallarge building projects in India over the next five years. The estimated cash flows for eachalternative are given below. The construction company's MARR is 15% per year. Which of thethree alternatives, if any, should be adopted? State your main assumptions.Capital investmentNet annual revenueSalvage valueUseful lifeCaterpillar$22,000$7,000Deere$26,200$9,500Case$17,000$5,200$4,000$5,000$3,5004 years3 years5 years

The objective of the question is to determine which of the three earth-moving equipment alternatives…

Answered: 2. Three mutually exclusive…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Determine which model is to selected.... Without plagiarism
Consider the following two mutually exclusive projects being considered by an agency. The agency's MARR is 4% per year and the projects have a service life of 5 years Project 1 $14,300 $3,743 $2,363 Answer the following questions Initial cost Annual revenues Present Worth (PW) a. Based on the PW, the project that is more economical is Project(Enter the project number) b. Calculate the IRR of each alternative (use the trial-and-error method) The IRR of Project 1 is % (Round to the nearest one decimal place) The IRR of Project 2 is% (Round to the nearest one decimal place) c. Perform the incremental IRR analysis to determine the project that is more economical Incremental IRR-% (Round to the dearest one decimal place). Therefore, based on the incremental IRR, Project is more economical d. Do the two methods produce the same recomendation for the most economical project? OA. Yes B. No Project 2 $21.500 $5,399 $2,535 e. IMPORTANT Note from this example that a higher IRR for an individual…
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1 - Assuming an interest rate of 3% per year (effective), calculate the feasibility of each option. You can use either Present Worth Analysis or Equivalent Uniform Worth Analysis. In this part, your calculation should be done without the use of Excel. Show your equations and the results. 2 - Using linear interpolation, calculate the rate of return for each option. Here, your calculation should be implemented using Excel. 3 - Assuming that the initial equipment can be depreciated over the course of 20 years and usingDouble Decline Balance Depreciation, calculate the depreciation schedule for the equipment. 4- Assume a state income tax of 5%. Calculate the after-tax cashflow for each option assuming the depreciation used. Use only the depreciation on question 2.
6.1 A dam is proposed on a stretch of wild river, a river that is currently used for recreation. The dam will generate electricity. The dam will have a useful life of 50 years, after which its reservoir will be full of sediment and the dam will need to be removed. The following are characteristics of the dam: Initial Cost: $100,000,000 Electricity produced: 100,000 MWh per year at $100/Mwh Cost of decommissioning dam: $10,000,000 Value of recreation lost: $5,000,000 per year Assume that costs and benefits accrue at the end of each period. a. If the social discount rate is 3% per year, is the dam a good idea? b. If the social discount rate is 10% per year, is the dam a good idea? c. Calculate the "cutoff" discount rate, c, such that the dam is a good idea for discount rates rc and a bad idea for discount rates r > c.
You have been asked to perform an economic evaluation of two projects and recommend one of them for implementation. The project parameters are as follows: Project A Project B Discount Rate 4.0% 4.0% Your analysis concludes that: Project Cost $1,000,000 $750,000 Project Life (yrs) 10 15 Elec. Savings Elec. Cost (kWh/yr) ($/kWh) 800,000 600,000 O Project A is preferable, but Project B also has attractive performance. O Project B is preferable, but Project A also has attractive performance. O Project B is preferable and Project A results in a net loss. O Project A is preferable and Project B results in a net loss. $0.12 $0.12 Annual Cost Escalation Rate 1.5% 1.5%
Q1: Three mutually exclusive alternatives X, Y, and Z are being considered as a permanent solution to an assembly line bottleneck. The data are: [6 marks] Initial Costa Annual Benefit Useful Life (years) Y Z $10k $15k $20k 1.6k 5 1.5k 1.9k 10 15 ⚫ As a prefix in SI units, k is an acronym for kilo, meaning 1,000. Assuming zero salvage value and an annually compounded interest rate of 8% per year, which alternative should be selected based on the AW-criterion. ( Show detailed calculations). Q2: Find out the capitalized cost of a certain investment based on the following: [4 marks] 1. An initial deposit of $100,000 2. Recurring payments of $10,000 each 6 years starting by the end of the first year for infinity. 3. Annual uniform payments of $2,000 starting by the end of year 10 for infinity. Use Interest rate = 6%
5) ) Use a MARR of 10%, useful life of 5 years and the Present Worth method to select between the investment alternatives below. Alternative A B Capital investment $90,000 $115,00 Annual revenues less $38,000 $45,000 expenses
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
(c) If A and B are mutually exclusive projects, which project would you select based on the rate of return on incremental investment at MARR = 10%? The rate of return on the incremental investment is %. (Round to one decimal place.) Which project would you select based on the rate of return on incremental investment at MARR = 10%? Choose the correct answer below. Project A O Project B 1: More Info FOT23 n 0 1 Net Cash Flow Project A - $145,000 35,000 35,000 140,000 Project B - $130,000 25,000 25,000 150,000
am. 175.
A major equipment purchase is being considered by Metro Atlanta. The initial cost is determined to be $1,000,000. It is estimated that this new equipment will save $100,000 the first year and increase gradually by $50,000 every year for the next 6 years. MARR=10% a. Using Benefit- Cost analysis, what is the Benefit/Cost ratio for this equipment purchase? b. Based on the Benefit/Cost analysis should Metro Atlanta purchase the equipment?

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