4-(Extra Credit) Assume you must choose between the two alternatives below and that a MARR of 12% is required. Which alternative is best? Hint: the IRR for both options are greater than 12% Year 0 1 2 4 A -$11,000 -$6,000 $8,000 $8,000 $8,000 B -$10,000 $4,000 $4,000 $4,000 $4,000

4-(Extra Credit) Assume you must choose between the two alternatives below and that a MARR of 12% is required. Which alternative is best? Hint: the IRR for both options are greater than 12% Year 0 1 2 4 A -$11,000 -$6,000 $8,000 $8,000 $8,000 B -$10,000 $4,000 $4,000 $4,000 $4,000

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Given the following cash flows and Year Cash Flow $275,000 1 $35,000 $65,000 3-6 $95,000 7 $135,000…

A: Year Cash Flow 0 -275000 1 35000 2 65000 3 95000 4 95000 5 95000 6 95000 7 135000…

Q: With interest at 10%, what is the benefit-cost ratio for this government project? Initial Cost…

A: A benefit–cost ratio (BCR) is an indicator, used in cost–benefit analysis, that attempts to…

Q: Consider the following cash flow profile and assume MARR is 10%/year. EOY NCF 0 1 2 3 4 5 6 -$80 $12…

A: Economic Rates of Return (abbreviated as ERR) gives a single metric that reflects how a project's…

Q: MARR 20% EOY Cash Flow 0 $(70,000.00) 1 $ 20,000.00 2 $ 19,000.00 3 $ 18,000.00 4 $…

A: At the point when an organization concludes whether a venture merits the costs that will be caused…

Q: What is the equivalent annual cost in years 1 through 9.00 of a contract that has a first cost of…

A: Present value is the current value of future cash flows or payments. It is the discounted value of…

Q: The equivalent amount of money that can be spent seven years from now in lieu of spending $50,000…

A: In economics, future value of an asset is the value of the current asset at a future date, when the…

Q: A day is spending $19 million on a new sewage system. The expected life of the system is 50 years,…

A: The capitalised cost or worth of a specific project or investment provides an approximation of the…

Q: Craig Nuts Inc. will need to invest in a new nut cracking machine. The plant engineer has gathered…

A: Future worth refers to the compounding of present cash flows at a given rate . FW = ∑Cash flow…

Q: DuraTech Manufacturing is evaluating a process improvement project. The estimated receipts and…

A: Investment in macroeconomics means gross private domestic investment. This concern is mainly to…

Q: 5. Given: Assume i = 10% per year Alternative 1 Electric Power Alternative 3 Solar Power P6000 P50…

Q: points A project reguires an investment of $1,000,000 at year zero, It will pay $100.000 per vear…

A: In economics and finance, present value, also known as present discounted value, is the value of an…

Q: Miss Piggy is considering a new investment in a boutique store. She has scouted three locations that…

A: Location A Location B Location C Initial Cost 2,50,000 2,00,000 3,00,000 Annual cost 3,000…

Q: Illustrate the cashflow diagram and compute for the payback period for a project with the following…

A: Given,First Cost = $20,000Annual Benefits = $8,000Annual Maintenance = $2,000 in year 1 and then it…

Q: Operating costs are an important criteria when selecting what machinery would be the best choice for…

A: An investment's equivalent uniform annual worth is the equivalent annuity that corresponds to all of…

Q: If the rate of return on the additional cash flows between the two alternatives is less than the…

A: The incremental IRR is the Calculation of IRR between the two mutually exclusive alternative and it…

Q: using an interest rate of 3% per year(effective), calculate feasibility of each option (I),(II). use…

A: Present Worth Analysis involves discounting future cash flows to their present value using a…

Q: Consider the following cash flow profile and assume MARR is 10%/year. EOY NCF 0 1 -$85 $28

A: MARR stands for Minimum Acceptable Rate of Return. It is the lowest rate of return that an investor…

Q: Choose between the two proposals below. (i=7% APR) $1,000 NPW. $800 A 환 0 1 2 YR NPW. B 0 A=$1,200 1…

A: proposal A Initial cost = 1000 Cash inflow in year1 = 800 Cash inflow in year2 = 1000 proposal B…

Q: A printing press machine has a cash equivalent ofP250,000. For the first three years, it will…

A: Given Investment = P 250,000 Profit each year = P20,000 MARR = 7% EARR =15%

Q: Would love some help on how to approach this - thanks! The cash flows for three different…

A: The incremental rate of return method is used to check whether the higher-cost alternative is…

Q: 01. Two alternatives have the following cash flows: alternative End of Year A B – $2000 + $800 +…

A: Present Values: Net present value of Alternative A = 800(P/A, 12%, 4) - 2000= 800…

Q: The table below summarizes the comparison between four mutually exclusive alternatives using the IRR…

A: The Internal Rate of Return (IRR) is a financial metric used in economics to estimate the…

Q: First Cost Annual Operating Cost Salvage Value Option A $72,000 $8,000 $49,000 after 2 years $12,000…

A: To find the present worth of cost for 7 year period we take following steps for option A : 1 .) We…

Q: Annual Upkeep P160,000 P50,000 Repairs P1.5M every 4 years P1M every 6 years If interest is 7.5%…

A: A capitalized cost is an expense added to the cost basis of a fixed asset on a company's balance…

Q: How did you come up with the Fw = A( F/A, i1, n1 ) ( F/P, i2 , n2 ) + A( F/A i2, n2 ) formula?

A: Present value is the value of investment in today's dollar. Future value is the value of investment…

Q: 40 40 30 40 30 8+ 20 8. The following cash flow pattern continues indefinitely as shown. The rate of…

A: The rate of return for a cash flow pattern can be found using the internal rate of return (IRR)…

Q: Reference the cash flows shown below. Pick the best alternative using the ERR method. MARR= 15%. e=…

A: The Economic Rate of Return is defined as the rate calculated from the Cashflow of an investment,…

Q: What is net future value for a project with MARR 10% and cash flows of: year 0: -200; year 1: $50;…

A: Present value is the value of investment in today's dollar. Future value is the value of investment…

Q: A new manufacturing facility will produce two products, each of which requires a drilling operation…

A: Given that; Total hour of operation, t= 2250 hours per year Machine availability of machine D1= 75%…

Q: Plot a graph of FW versus MARR, where MARR varies from 0 percent to 50 percent by 1 percent…

A: Future Worth refers to the compounded value of the cash flow in a distant future when discounting is…

Q: The cash flows of two alternatives are given below. Determine the difference in the no-return…

A: We can calculate the payback period of both alternative firm , after that we can find the no return…

Q: l company is consi pment Data concerning the three best Ful life of the equipment is 20 years and…

A: Internal rate of return is a strategy for working out a venture's pace of return. The term interior…

Q: Directions: Record the given information, draw the cash flow diagram and solve. A material handling…

A: External rate of return (ERR) refers to the rate of return on a project and the “excess” cash from a…

Q: Question 4 Which increment should be examined first in incremental rate of return analysis, if MARR…

A: Alternative selection can be done on the basis of incremental internal rate of return (IRR). For one…

Q: Need Asap Illustrate the cashflow diagram and compute for the payback period for a project with the…

A: Given, First Cost = $20,000 Annual Benefits = $8,000 Annual Maintenance = $2,000 in year 1 and then…

Q: For the given CFD if the MARR (1)-8%, the Net Present Worth, NPW is close to: $7,000 Benefits $2.000…

A: We have given the cash flow diagram representing the cost and benefit of a project and MARR =8%.The…

Q: npounded monthly) with a maintenance cost of $75 per month. If the nominal in % per year compounded…

A: Answer The correct answer is 'option c' i.e., 12.8 years. Breakeven period for the two option…

Q: Determine the difference between the capitalized cost of the timber and steel penstock for a…

A: Following is the given information: The first cost of the Timber = Php 50,000 The first cost of the…

Q: Margaret has a project with a $28 000 first cost that returns $5000 per year over its 10-year life.…

A: The payback period is the amount of time which it takes in order to recover the cost of an…

Q: Consider the information given below: ΕΟΥ Cash Flow 0 -$300 +125 +125 +125 1 2 3 IF MARR = 10%, then…

A: The payback period is calculated by using the formula: Payback period =years before full recoevry…

Q: Need Asap Illustrate the cashflow diagram and compute for the payback period for a project with the…

A: Given,First Cost = $20,000Annual Benefits = $8,000Annual Maintenance = $2,000 in year 1 and then it…

Q: An item is purchased for P200000. Annual cost is P20 000. Using 8%, what is the capitalized cost(P)…

A: P = 200000 Annual cost = 20000 Interest rate = 8 %

Q: Considering the alternatives shown in the table below, perform an incremental ROR analysis and…

A: Given, There are 4 alternatives : A, B , C and DYears : 0 and 1Initial Cost and Benefit are given…

Q: For the following 4 options (one must be chosen), what is the smallest MARR for the "Do Nothing"…

A: MARR is an acronym that stands for "Minimum Acceptable Rate of Return," and it is a financial and…

Question

4-(Extra Credit) Assume you must choose between the two alternatives below and that a MARR of 12%
is required. Which alternative is best? Hint: the IRR for both options are greater than 12%
Year
0
1
2
3
4
A
-$11,000
-$6,000
$8,000
$8,000
$8,000
B
-$10,000
$4,000
$4,000
$4,000
$4,000

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

earch 1 Bailey, Inc., is considering buying a new gang punch that would allow them to produce circuit boards more efficiently. The punch has a first cost of $120,000 and a useful life of 15 years. At the end of its useful life, the punch has no salvage value. Annual labor costs would increase $2,000 using the gang punch, but annual raw material costs would decrease $15,000. MARR is 4.0%/year. Part a Q Ft A What is the present worth of this investment? $ Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is +5. eTextbook and Media Z Save for Later Part b The parts of this question must be completed in order. This part will be available when you complete the part above. @ 2 F2 E 3 S W WE D x $ 4 R F FB % 5 FG 6 TY G F7 & 7 H n FB U * 8 F9 Attempts: 0 of 3 used I 02 ( 9 F10 J K X CV BN M O - ) F11 0 L < Alt Submit Answer *+ P F12 11 : 85°F Mostly cloud Prisc ( + 11 [ ? Inse A
what's the PW of Alternative A and B?
The American Pharmaceutical Company (APC) has a policy that all capital investments must have a five-year or less discounted payback period in order to be considered for funding. The MARR at APC is 9% per year. Is the above project able to meet this benchmark for funding? What is the payback period?
None
Carlisle Company has been cited and must invest in equipment to reduce stack emissions or face EPA fines of $20,500 per year. An emission reduction filter will cost $75,000 and have an expected life of 5 years. Carlisle's MARR is 10%/year. Part a What is the future worth of this investment? $ Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is £10.
Give proper answer without photo answer and take a like
Please answer fast please arjent help please
QUESTION 7 for th below two machines and based on AW analysis which machine we should select? MARR=10%. Machine A First cost, $ Annual cost, $/year Salvage value, $ Life, years 3 Answer the below question: A- the AW for machine A= 25,433 12,199 7,603 Machine B 100,000 7,000 infinite
Please answer fast please arjent help
Which increment should be examined first in incremental rate of return analysis, if MARR = 10.0%? Do-nothing A B C D First cost 0 $8,000 $4,500 $8,500 $6,000 Annual 0 1,387 914 1,661 935 benefit Life 10 yrs ROR 11.5% 15.5% 14.5% 9.0% A-B OB-A OA-C OB-C
Economics
Given cash flows for two alternatives as shown in table below, choose the most attractive alternative if MARR = 8%. Year 0 1 2 3 through ∞ Alt. A -$42K $3.6K $3.6K $3.6K Alt. B -$54K $4.7K $4.7K $4.7K Group of answer choices Alt. A Alt. B Select neither Select either