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5. Flextire Manufacturing is considering two mutually exclusive proposals. Each will cost $80,000 and wi last 6 years. Cash flows and estimated probabilities are presented below. Based on an MARR of 10%, use decision tree analysis to determine which proposal Flextire should consider. Proposal A Proposal B Probability Benefits per year Benefits per year $18,000 Probability Conservative= 0.40 Conservative=0.25 $17,500 20,000 Most likely= 0.60 20,500 Most likely= 0.35 23.000 Optimistic= 0.15 23.000 Optimistic= 0.25

5. Flextire Manufacturing is considering two mutually exclusive proposals. Each will cost $80,000 and wi last 6 years. Cash flows and estimated probabilities are presented below. Based on an MARR of 10%, use decision tree analysis to determine which proposal Flextire should consider. Proposal A Proposal B Probability Benefits per year Benefits per year $18,000 Probability Conservative= 0.40 Conservative=0.25 $17,500 20,000 Most likely= 0.60 20,500 Most likely= 0.35 23.000 Optimistic= 0.15 23.000 Optimistic= 0.25

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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5. Flextire Manufacturing is considering two mutually exclusive proposals. Each will cost $80,000 and will last 6 years. Cash flows and estimated probabilities are presented below. Based on an MARR of 10%, use decision tree analysis to determine which proposal Flextire should consider. Proposal A Proposal B Benefits per year Probability Benefits per year Probability Conservative= 0.40 $18,000 Conservative=0.25 $17,500 20,000 Most likely= 0.60 20,500 Most likely= 0.35 23,000 Optimistic = 0.15 23,000 Optimistic 0.25 Write a brief interpretation of your answer.
Transcribed Image Text:5. Flextire Manufacturing is considering two mutually exclusive proposals. Each will cost $80,000 and will last 6 years. Cash flows and estimated probabilities are presented below. Based on an MARR of 10%, use decision tree analysis to determine which proposal Flextire should consider. Proposal A Proposal B Benefits per year Probability Benefits per year Probability Conservative= 0.40 $18,000 Conservative=0.25 $17,500 20,000 Most likely= 0.60 20,500 Most likely= 0.35 23,000 Optimistic = 0.15 23,000 Optimistic 0.25 Write a brief interpretation of your answer.
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