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

9-54 Three mutually exclusive alternatives are being considered: B Initial cost $500 $400 $300 Benefit at end of the first 200 200 200 year Uniform benefit at end of 100 125 100 subsequent years Useful life, in years 4 At the end of its useful life, an alternative is not replaced. If the MARR is 10%, which alternative should be selected (a) Based on the payback period? (b) Based on benefit-cost ratio 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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I want to understand how to do this question, and if I have to expand the annuities into the option with the most years. This is for engineering economics.

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

Application of economic techniques to the evaluation of design and engineering alternatives. The role of engineering economics is to assess the appropriateness of a given project, estimate its value, and justify it from an engineering standpoint.

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