9-54 Three mutually exclusive alternatives are beingAconsidered:Initial costBenefit at end of the firstyearUniform benefit at end ofsubsequent yearsUseful life, in yearsA$50020011006B$4002001255(a) Based on the payback period?(b) Based on benefit-cost ratio analysis?C$3002001004At the end of its useful life, an alternative is notreplaced. If the MARR is 10%, which alternativeshould be selected

Present value refers to a financial concept that calculates the current value of an amount of money…

9-54 Three mutually exclusive alternatives are being A considered: Initial cost Benefit at end of the first year Uniform benefit at end of subsequent years Useful life, in years A B $500 $400 200 200 100 6 125 5 C $300 200 (a) Based on the payback period? (b) Based on benefit-cost ratio analysis? 100 4 At the end of its useful life, an alternative is not replaced. If the MARR is 10%, which alternative should be selected

9-54 Three mutually exclusive alternatives are being A considered: Initial cost Benefit at end of the first year Uniform benefit at end of subsequent years Useful life, in years A B $500 $400 200 200 100 6 125 5 C $300 200 (a) Based on the payback period? (b) Based on benefit-cost ratio analysis? 100 4 At the end of its useful life, an alternative is not replaced. If the MARR is 10%, which alternative should be selected

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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9- Two alternatives with identical benefits are being considered: AB $500 $800 150 Initial cost Uniform annual cost 200 Useful life, in years 8 8 (a) Compute the payback period if Alt. B is purchased rather than Alt. 4. (b) Use a MARR of 10% and benefit-cost ratio analysis to identify the alternative that should be selected.
8- The life of a project is 10 years. An equipment is needed for this project. Two alternatives are available. Equipment A has an initial cost of $5000.00, an annual maintenance cost of $300.00, and a salvage value of $800.00 after 5 years. Equipment B has an initial cost of $7000.00, an annual maintenance cost of $400.00, lasts for 10 years and has no salvage value. If the interest rate is 6%: a) Equipment A should be purchased. b) Equipment B should be purchased. c) No equipment should be purchased. d) There is no difference in choosing between A or B.
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Multiple Alternatives 8-12 Consider the following alternatives: Initial cost $300 $600 $200 35 981 Uniform annual benefits 41 Each alternative has a 10-year useful life and no salvage value. (a) Construct a choice table for interest rates from 0% to 100%. (b) If the MARR is 8%, which alternative should be selected?
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Please show the solution of finding the i*value which is 8.7%