**Consider the following two mutually exclusive projects being considered by an agency. The agency's MARR is 5% per year and the projects have a service life of 5 years.**| | Project 1 | Project 2 ||---|---|---|| Initial cost | $14,200 | $21,700 || Annual revenues | $3,832 | $5,608 || Present Worth (PW) | $2,391 | $2,580 |**Answer the following questions.**---**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 IRR = __% (Round to the nearest one decimal place);Therefore, based on the incremental IRR, Project __ is more economical.**d. Do the two methods produce the same recommendation for the most economical project?**- A. No- B. Yes

Cash flow:The sum of the total money is represented in the diagram. It represents the magnitude and…

Consider the following two mutually exclusive projects being considered by an agency. The agency's MARR is 5% per year and the projects have a service life of 5 years. Initial cost Annual revenues Present Worth (PW) Answer the following questions. The IRR of Project 1 is The IRR of Project 2 is Project 1 $14,200 $3,832 A. No B. Yes $2,391 Project 2 $21,700 $5,608 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) $2,580 % (Round to the nearest one decimal place) % (Round to the nearest one decimal place) c. Perform the incremental IRR analysis to determine the project that is more economical: Incremental IRR =% (Round to the nearest one decimal place); Therefore, based on the incremental IRR, Project is more economical. d. Do the two methods produce the same recomendation for the most economical project?

Consider the following two mutually exclusive projects being considered by an agency. The agency's MARR is 5% per year and the projects have a service life of 5 years. Initial cost Annual revenues Present Worth (PW) Answer the following questions. The IRR of Project 1 is The IRR of Project 2 is Project 1 $14,200 $3,832 A. No B. Yes $2,391 Project 2 $21,700 $5,608 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) $2,580 % (Round to the nearest one decimal place) % (Round to the nearest one decimal place) c. Perform the incremental IRR analysis to determine the project that is more economical: Incremental IRR =% (Round to the nearest one decimal place); Therefore, based on the incremental IRR, Project is more economical. d. Do the two methods produce the same recomendation for the most economical project?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Q#1. Complete the analysis based on IRR and ERR methods separately to identify if the given project is a good investment or not. The MARR is 10% potential cost and revenue data are as follow. Also draw the cash flow diagram. Project A $19000 $500 Investment Cost Annual Operation Cost Annual Revenue $3500 Salvage Value Useful Life $3000 10 Years (Also draw the cash flow diagram).
Which alternatives can be eliminated immediately in the first step of incremental rate of return analysis, if MARR = 10.0%? Do-nothing A B C D First cost 10 $6,000 $4,500 $9,500 $9,500 Annual 0 998 829 1,716 1,384 benefit Life 10 yrs ROR 10.5% 13.0% 12.5% 7.5% D only not enough information попе D and C
If a company purchases an equipment for $P and uses it for N years, and the compaany's MARR is i%, what is the EUAC of the Capital Recovery? Group of answer choices $A(F/A, i%, N) $P(F/P, i%, N) %A(P/A, i%, N) $P(A/P, i%, N)
P3
Subject:eco
7
MANUAL SOLUTIONS NOT EXCELDOWNVOTE IF EXCELDetermine the difference between the capitalized cost of the timber and steel penstock for a hydroelectric plant with interest of 10%: Timber Steel First Cost Php50,000 Php80,000 Estimated Life 10 years 30 years Scrap Value Php2,000 None Annual Maintenance Php1,200 Php200 Show calculations for the capitalized cost of each item separately.
15. You want to open a new business but for the first 3 years you wont make any income as it takes time for the paperwork and approvals to process. After your business is up and running, you will make $75,000 per year forever. What is the capitalized cost of the income at 8% per year? What does the capitalized cost represent in layman terms?
A project requires an initial investment of 47,000 dollars. The instream cashflow is 800 dollars per year. The time value of money is 4.58 percent. Compute the payback period. Note: Please don't divide 47000/800 and post that answer. That is not the correct solution, we need to use 4.58 percent too to get the solution.
1
Engr. Collado is considering two types of machineries that will use in construction Equipment A Equipment B INITIAL COST Php 350000 Php 780000 ESTIMATED LIFE 15 years 15 years Php 55000 Php 57000 ANNUAL LABOR COST Php 90000 SALVAGE VALUE Php 120000 If the minimum require rate of return is 20%, which equipment should Engr. Collado chose?
Required information The tabulation of the incremental cash flows between alternatives A and B is shown. Alternative A has a 3-year life and alternative B a 6-year life. Year Incremental Cash Flows (BA), $ -22,500 5,000 5,000 11,000 5,000 5,000 5,000 NOTE: This is a multi-part question. Once an answer is submitted, you will be unable to return to this part. 0123456 If neither alternative has a salvage value, what is the first cost of alternative A? The first cost of alternative A is $-