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5. A firm has available three investment proposals A, B, and C having cash flow profiles below. The firm has a MARR ( Mean Attractive rate of return) of 1.53095% per month.

5. A firm has available three investment proposals A, B, and C having cash flow profiles below. The firm has a MARR ( Mean Attractive rate of return) of 1.53095% per month.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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5. A firm has available three investment proposals A, B, and C having cash flow profiles below. The firm has a MARR ( Mean Attractive rate of return) of 1.53095% per month. Initial investment Annual receipts (income) Annual costs Salvage value Life, years Option A $200 000 $160 000 $ 100 000 $ 50 000 8 Option B $300 000 $190 000 $110 000 $ 100 000 11 Option C $150 000 $ 200 000 $ 150 000 $ 50 000 7 Using the annual worth analysis, a) Determine the preferred proposal. b) If the projects are independent, which of them should be selected?
Transcribed Image Text:5. A firm has available three investment proposals A, B, and C having cash flow profiles below. The firm has a MARR ( Mean Attractive rate of return) of 1.53095% per month. Initial investment Annual receipts (income) Annual costs Salvage value Life, years Option A $200 000 $160 000 $ 100 000 $ 50 000 8 Option B $300 000 $190 000 $110 000 $ 100 000 11 Option C $150 000 $ 200 000 $ 150 000 $ 50 000 7 Using the annual worth analysis, a) Determine the preferred proposal. b) If the projects are independent, which of them should be selected?
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