A manufacturer of automated optical inspection (AOI) devices is deciding on a project to increase theproductivity of the manufacturing processes. The estimated costs for the two feasible alternatives beingcompared are shown below. Use the ERR method to determine which alternative should be selected if thereinvestment rate equals the company's MARR of 4% per year. Assume you already know that the ERR ofAlternative M is 4.11%.AlternativeInitial costsNet annual cash flowLife, yearsMN$30,000 $45,000$4,500 $7,00088

Before investing in new projects or assets, profitability is evaluated by using various methods like…

Answered: A manufacturer of automated optical…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Three different plans were presented to the Ahbhalet Corporation for operating an identity-theft scanning system. Plan A involves renewable 1-year contracts with payments of $1.1 million at the beginning of each year. Plan B is a 2-year contract that requires four payments of $360,000 each, with the first one made now and the other three at 6-month intervals. Plan C is a 3-year contract that entails payment of $3.5 million now and the second payment of $0.5 million 2 years from now. Assuming that the company could renew any of the plans under the same payment conditions, determine which plan is best on the basis of a PW analysis at a MARR of 6% per year compounded semiannually. The present worth of plan A is $ The best plan on the basis of the present worth analysis is plan B the present worth of plan B is $ and the present worth of plan C is $
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