Your division is considering two investmentprojects, each of which requires an up-frontexpenditure of $25 million. You estimate that thecost of capital is 10 percent and that theinvestments will produce the following after-taxcash flows (in millions of dollars):Year1234Project A5101520Project B201086a. What is the regular payback period for each ofthe projects?

Payback period is defined as the number of years required to recover the original cash investment.…

Answered: 3 4 15 20 8 6 a. What is the regular…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Fitzgerald, Ivy, Garcia, Nichols, Eudy, Williams, Thomas, Owens, and Nagy (FIGNEWTON) Inc. must replace its fig - crushing equipment. The alternatives under consideration are presented below. Alternative First Cost Net Annual Benefits Useful Life A $170, 500 $14, 675 5 years B 205,000 17,000 7 years C 242,500 16, 350 8 years D 290,000 14,825 10 years a) Which anlaysis method should be used to select the alternative? b) Why should that analysis method be used? c) if FIGNEWTON uses a MARR of 8%, what alternative should be chosen? d) if FIGNEWTON uses a MARR of 18%, what alternative should be chosen? Submit one excel file with answers a), b), c) and d) highlighted clearly.
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3 4 15 20 8 6 a. What is the regular payback period for each of the projects?