A postal company has installed a new system with a capital investment of $65,000. It is projected to have a service life of 5 years and a negligible market value at the end of its service life. The company's MARR is 14%.The system is projected to have the following annual savings: EOY 1 2 3 4 5 Savings $25,000 | 30,000 | 30,000 | 40,000 | 46,000 Using NFW method, is this investment acceptable? What is the NAW of this investment? a. b. с. What is the discounted payback period?

A postal company has installed a new system with a capital investment of $65,000. It is projected to have a service life of 5 years and a negligible market value at the end of its service life. The company's MARR is 14%.The system is projected to have the following annual savings: EOY 1 2 3 4 5 Savings $25,000 | 30,000 | 30,000 | 40,000 | 46,000 Using NFW method, is this investment acceptable? What is the NAW of this investment? a. b. с. What is the discounted payback period?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A firm is considering three mutually exclusive alternatives as part of an upgrade to an existing transportation network. Installed cost $40,000 $6,400 $30,000 $20,000 Net annual revenue $5.650 $5,250 Salvage value Useful life 20 years 20 years 10 years Calculated IRR 15.0% 18.2% 22.9% At EOY 10, alternative NI would be replaced with another alternative having the same installed cost and net annual revenues. If MARR is 10% per year, which alternative (if any) should be chosen? Use the incremental IRR procedure. Arrange (rank order) the teasible alternatives to use the incremental IRR procedure (Hint DN indicates "do nothing" alternative). Choose the correct answer below O A. I, I, I, DN O B. DN, I, N, NI Oc. DN, ,N, O D. DN. .I Perform the incremental IRR Analysis. Fil-in the table below (Round to one decimal place) Incremental Alternative to be Investment Inc. IRR selected
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