A company has decided to build a PV system and it has three options, knowing that MARR is 9%: 1. Systems "A" cost of 300,000 € with annual savings of 3200 €, the project life time is 20 years. 2. Systems "B" cost of 400,000 € with annual saving of 2000 € increased by 250 € every year, the project life is 30 years. 3. System "C" cost 500,000 € with annual savings of 12,000 € decreased by 150 € every year, the project life is 15 years. - Help the company to decide which system should choose? V Draw the cash flow diagram of each system Solve this problem using present worth approach. V Solve this problem using annual worth approach.

A company has decided to build a PV system and it has three options, knowing that MARR is 9%: 1. Systems "A" cost of 300,000 € with annual savings of 3200 €, the project life time is 20 years. 2. Systems "B" cost of 400,000 € with annual saving of 2000 € increased by 250 € every year, the project life is 30 years. 3. System "C" cost 500,000 € with annual savings of 12,000 € decreased by 150 € every year, the project life is 15 years. - Help the company to decide which system should choose? V Draw the cash flow diagram of each system Solve this problem using present worth approach. V Solve this problem using annual worth approach.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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2. You are presented with three investment possibilities; however, you only have enough money to invest in one (the opportunities are mutually exclusive). The MARR is 5%,. Which one should be chosen? Make a decision based on an incremental rate of return analysis. A B Initial Cost Annual Benefit $ Salvage ValueS Life (yrs) $ (100,000) $ (150,000) S (210,000) 45,000 $ 35,000 $ 6. 50,000 $ 10,000 S 27,000 40,000 6| 8% ROR 12% 11%
A P 3.3 M 1,000,000 320,000 330,000 B P 3.4 M 1,120,000 420,000 340,000 C D P 4.4 M P 2.8 M 750,000 1,400,000 180,000 500,000 280,000 440,000 Investment Annual revenue Annual cost Salvage value All of the proposals have a project life of 10 years. D and E are mutually exclusive. It is also known that B is contingent on D, while A and C are contingent on E. The maximum amount available for investment is P 4.5 M. Matrix of Investment Alternatives (Format) Alternative A B C E P 5.2 M 1,600,000 550,000 520,000 a. Develop the matrix of investment alternatives. Indicate which alternatives are feasible. (Follow the format of the table given below). D E Feasible? b. Use the Future Worth method to find the best alternative. Assume that MARR is 14% per year.
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Req#2: Use Aw analysis to find the best alternative for your company starting one of the following projects. Your company MARR is 9.1 %. Draw the cashflow diagram. Projects data First cost, $ Annual cost, $/year Annual revenue, $/year Life, years Project-1 -85,000 -23, 100 54,000 5 I Project-2 -135,000 -11,000 55, 100 10 Project-3 -77,000 -21, 100 37, 100 5 Project-4 -90,000 -26, 100 47, 100 5
Two different types of hydraulic equipment are being considered for a certain power plant. Machine A has a first cost of P 12,000, salvage value of P 1,500 at the end of its life of 6 years, and maintenance cost of P 900 annually. machine B has a first cost of P 13,600, no salvage value after 8 years, and annual maintenance of P 700. Money is worth 7%. What is the annual worth of machine A if annual revenue is P 4,200?
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Engineering Economics . I hope For the solution as soon as possible
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A firm urgently needs a large printer and will either lease a printer at an end-of-year cost of $ 5000 for a 6 year period, or they will purchase the printer at an initial cost of $60,000. If purchased, the printer will have a zero salvage value at the end of 6-years life. No other costs are to be considered. MARR is 5%. What is the best investment decision on the basis of the internal rate of return. a. IRR could not be calculated due to no change in cashflow sign b. Negative IRR is not justified and is not applied here to make a proper decision c. Lease d. Buy