A total of $50,000 was allocated to a project to detect and reduce insider theft in the ZipCar auto parts store. Two alternatives identified as Y and Z are under consideration. The overall ROR on the $50,000 is expected to be 40%, with the rate of return on the $20,000 increment between Y and Z at 15% per year. If Z is the higher first-cost alternative, (a) what is the size of the investment required in Y, and (b) what is the rate of return on Y?
A total of $50,000 was allocated to a project to detect and reduce insider theft in the ZipCar auto parts store. Two alternatives identified as Y and Z are under consideration. The overall ROR on the $50,000 is expected to be 40%, with the rate of return on the $20,000 increment between Y and Z at 15% per year. If Z is the higher first-cost alternative, (a) what is the size of the investment required in Y, and (b) what is the rate of return on Y?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
A total of $50,000 was allocated to a project to detect
and reduce insider theft in the ZipCar auto
parts store. Two alternatives identified as Y and Z
are under consideration. The overall ROR on the
$50,000 is expected to be 40%, with the
return
at 15% per year. If Z is the higher first-cost alternative,
(a) what is the size of the investment required
in Y, and (b) what is the rate of return on Y?
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