8-19 Andrews Manufacturing offers three models for oneof its products to its customers. You have been askedto analyze the choices from the customer's perspec-tive. Which model should a customer choose if eachmodel has a life of 12 years? Doing nothing is analternative.AlternativeDeluxeRegularEconomyFirst cost$220,000 S125,00043,00013,000$75,00028,0008,000Annual benefit79,000Maintenance and38,000operating costsSalvage value16,0006,9003,000(a) Construct a choice table for interest rates from0% to 100%.(b) MARRanalysis, which alternative, if any, should the15%. Using incremental rate of returncustomer choose?

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Andrews Manufacturing offers three models for one of its products to its customers. You have been asked to analyze the choices from the customer's perspec- tive. Which model should a customer choose if each model has a life of 12 years? Doing nothing is an alternative. Alternative Deluxe Regular Economy First cost $220,000 $125,000 79,000 $75,000 28,000 Annual benefit 43,000 Maintenance and 38,000 13,000 8,000 operating costs Salvage value 16,000 6,900 3,000 (a) Construct a choice table for interest rates from 0% to 100%. (b) MARR = 15%, Using incremental rate of return analysis, which alternative, if any, should the %3D customer choose?

Andrews Manufacturing offers three models for one of its products to its customers. You have been asked to analyze the choices from the customer's perspec- tive. Which model should a customer choose if each model has a life of 12 years? Doing nothing is an alternative. Alternative Deluxe Regular Economy First cost $220,000 $125,000 79,000 $75,000 28,000 Annual benefit 43,000 Maintenance and 38,000 13,000 8,000 operating costs Salvage value 16,000 6,900 3,000 (a) Construct a choice table for interest rates from 0% to 100%. (b) MARR = 15%, Using incremental rate of return analysis, which alternative, if any, should the %3D customer choose?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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