One of these four mutually exclusive alterna-tives must be chosen. Each costs $13,000 and hasno salvage value. Similar alternatives will repeatindefinitely.Alter-nativeABCDAnnual Cost$1000 first year, thenincreasing $575 per year$100 first year, thenincreasing $500 per year$2500$4250 first year; thendeclining $500 per yearLife(yrs)767(a) Construct a choice table for interest rates from0% to 100%.(b) If the MARR is 8%, which alternative should beselected?

We are provided with the initial and annual costs of 4 alternatives and we need to derive choice…

A $1000 first year, then increasing $575 per year B C D $100 first year, then increasing $500 per year $2500 $4250 first year; then declining $500 per year 7 6 7 8 (a) Construct a choice table for interest rates from 0% to 100%. (b) If the MARR is 8%, which alternative should be selected?

A $1000 first year, then increasing $575 per year B C D $100 first year, then increasing $500 per year $2500 $4250 first year; then declining $500 per year 7 6 7 8 (a) Construct a choice table for interest rates from 0% to 100%. (b) If the MARR is 8%, 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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Question

One of these four mutually exclusive alterna-
tives must be chosen. Each costs $13,000 and has
no salvage value. Similar alternatives will repeat
indefinitely.
Alter-
native
A
B
C
D
Annual Cost
$1000 first year, then
increasing $575 per year
$100 first year, then
increasing $500 per year
$2500
$4250 first year; then
declining $500 per year
Life
(yrs)
7
6
7
(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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