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. Answer the following questions. Initial cost Annual revenues Present Worth (PW) Project 1 $14,600 $3,901 $2,767 ACCOR Project 2 $22,100 $5,638 $2,999 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 recomendation for the most economical project?
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. Answer the following questions. Initial cost Annual revenues Present Worth (PW) Project 1 $14,600 $3,901 $2,767 ACCOR Project 2 $22,100 $5,638 $2,999 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 recomendation for the most economical project?
Elements Of Electromagnetics
7th Edition
ISBN:9780190698614
Author:Sadiku, Matthew N. O.
Publisher:Sadiku, Matthew N. O.
ChapterMA: Math Assessment
Section: Chapter Questions
Problem 1.1MA
Related questions
Question

Transcribed Image Text: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.
Answer the following questions.
Initial cost
Annual revenues
Present Worth (PW)
Project 1
$14,600
$3,901
$2,767
Project 2
$22,100
$5,638
a. Based on the PW, the project that is more economical is Project
b. Calculate the IRR of each alternative (use the trial-and-error method)
% (Round to the nearest one decimal place)
The IRR of Project 1 is
The IRR of Project 2 is
% (Round to the nearest one decimal place)
$2,999
(Enter the project number).
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?
Expert Solution

This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps

Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, mechanical-engineering and related others by exploring similar questions and additional content below.Recommended textbooks for you

Elements Of Electromagnetics
Mechanical Engineering
ISBN:
9780190698614
Author:
Sadiku, Matthew N. O.
Publisher:
Oxford University Press

Mechanics of Materials (10th Edition)
Mechanical Engineering
ISBN:
9780134319650
Author:
Russell C. Hibbeler
Publisher:
PEARSON

Thermodynamics: An Engineering Approach
Mechanical Engineering
ISBN:
9781259822674
Author:
Yunus A. Cengel Dr., Michael A. Boles
Publisher:
McGraw-Hill Education

Elements Of Electromagnetics
Mechanical Engineering
ISBN:
9780190698614
Author:
Sadiku, Matthew N. O.
Publisher:
Oxford University Press

Mechanics of Materials (10th Edition)
Mechanical Engineering
ISBN:
9780134319650
Author:
Russell C. Hibbeler
Publisher:
PEARSON

Thermodynamics: An Engineering Approach
Mechanical Engineering
ISBN:
9781259822674
Author:
Yunus A. Cengel Dr., Michael A. Boles
Publisher:
McGraw-Hill Education

Control Systems Engineering
Mechanical Engineering
ISBN:
9781118170519
Author:
Norman S. Nise
Publisher:
WILEY

Mechanics of Materials (MindTap Course List)
Mechanical Engineering
ISBN:
9781337093347
Author:
Barry J. Goodno, James M. Gere
Publisher:
Cengage Learning

Engineering Mechanics: Statics
Mechanical Engineering
ISBN:
9781118807330
Author:
James L. Meriam, L. G. Kraige, J. N. Bolton
Publisher:
WILEY