A mechanical engineer at Anode Metals is considering five equivalent projects, some of which have different life expectations. Salvage value is nil for all alternatives. Assuming that the company’s MARR is 13% per year, determine which should be selected (a) if they are independent, and (b) if they are mutually exclusive. (c) Explain why your selection in part (b) is correct. First Cost, $ Net Annual Income, $/Year Life, Years A −20,000 +5,500 4 B −10,000 +2,000 6 C −15,000 3,800 6 D −60,000 +11,000 12 E −80,000 +9,000 12
A mechanical engineer at Anode Metals is considering five equivalent projects, some of which have different life expectations. Salvage value is nil for all alternatives. Assuming that the company’s MARR is 13% per year, determine which should be selected (a) if they are independent, and (b) if they are mutually exclusive. (c) Explain why your selection in part (b) is correct. First Cost, $ Net Annual Income, $/Year Life, Years A −20,000 +5,500 4 B −10,000 +2,000 6 C −15,000 3,800 6 D −60,000 +11,000 12 E −80,000 +9,000 12
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
A mechanical engineer at Anode Metals is considering
five equivalent projects, some of which have
different life expectations. Salvage value is nil for
all alternatives. Assuming that the company’s
MARR is 13% per year, determine which should
be selected (a) if they are independent, and (b) if
they are mutually exclusive. (c) Explain why your
selection in part (b) is correct.
First
Cost, $
Net Annual
Income, $/Year Life, Years
A −20,000 +5,500 4
B −10,000 +2,000 6
C −15,000 3,800 6
D −60,000 +11,000 12
E −80,000 +9,000 12
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