A printed circuit board manufacturer will construct a new plant. The potential sites have the following estimates of income and cost. A plant on Site A would cost $30.7 million (mil) to build, produce $28.6 mil/year in revenues, $21.4 mil/year in expenses, and last 15 years. At Site B construction will cost $34.2 mil with $35.4 mil of revenues per year, $27.7 mil/year in expenses and will also last 15 years. Use the internal rate of return to determine which site should be selected. The MARR is 9% per year. Which alternative would you choose as a base one? Choose the correct answer below. Site A O Site B Analyze the difference between the base alternative and the second-choice alternative.

A printed circuit board manufacturer will construct a new plant. The potential sites have the following estimates of income and cost. A plant on Site A would cost $30.7 million (mil) to build, produce $28.6 mil/year in revenues, $21.4 mil/year in expenses, and last 15 years. At Site B construction will cost $34.2 mil with $35.4 mil of revenues per year, $27.7 mil/year in expenses and will also last 15 years. Use the internal rate of return to determine which site should be selected. The MARR is 9% per year. Which alternative would you choose as a base one? Choose the correct answer below. Site A O Site B Analyze the difference between the base alternative and the second-choice alternative.

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

What is the IRR percentage

A printed circuit board manufacturer will construct a new plant. The potential sites have the following estimates of income and cost. A plant on Site A would cost $30.7 million (mil) to build, produce $28.6 mil/year in revenues, $21.4 mil/year in
expenses, and last 15 years. At Site B construction will cost $34.2 mil with $35.4 mil of revenues per year, $27.7 mil/year in expenses and will also last 15 years. Use the internal rate of return to determine which site should be selected. The
MARR is 9% per year.
Which alternative would you choose as a base one? Choose the correct answer below.
Site A
Site B
Analyze the difference between the base alternative and the second-choice alternative.
IRR A(B - A )= 9.6 %. (Round to one decimal place.)

Definition Definition Discount rate of a project wherein its net present value equals zero. Internal rate of return equates the present value of future cash flows with the initial investments. Internal rate of return helps to determine nominal cash flows.

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