Consider the following two mutually exclusive projects being considered by an agency. The agency's MARR is 4% per year and the projects have a service life of 5 years Project 1 $14,300 $3,743 $2.363 Answer the following questions Initial cost Annual revenues Present Worth (PW) a. Based on the PW, the project that is more economical is Project(Enter the project number) b. Calculate the IRR of each alternative (use the trial-and-error method) The IRR of Project 1 is (Round to the nearest one decimal place) The IRR of Project 2 is % (Round to the nearest one decimal place) c. Perform the incremental IRR analysis to determine the project that is more economical Incremental RR-% (Round to the earest one decimal place) Therefore, based on the incremental IRR, Project is more economical d. Do the two methods produce the same recomendation OA. Yes OB. No for the most economical project? Project 2 $21.500 $5,300 $2,535
Consider the following two mutually exclusive projects being considered by an agency. The agency's MARR is 4% per year and the projects have a service life of 5 years Project 1 $14,300 $3,743 $2.363 Answer the following questions Initial cost Annual revenues Present Worth (PW) a. Based on the PW, the project that is more economical is Project(Enter the project number) b. Calculate the IRR of each alternative (use the trial-and-error method) The IRR of Project 1 is (Round to the nearest one decimal place) The IRR of Project 2 is % (Round to the nearest one decimal place) c. Perform the incremental IRR analysis to determine the project that is more economical Incremental RR-% (Round to the earest one decimal place) Therefore, based on the incremental IRR, Project is more economical d. Do the two methods produce the same recomendation OA. Yes OB. No for the most economical project? Project 2 $21.500 $5,300 $2,535
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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