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. Project 1 $14,600 $3,901 Present Worth (PW) $2,767 Initial cost Annual revenues 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) Project 2 $22,100 $5,638 $2,999 c. Perform the incremental IRR analysis to determine the project that is more economical: Incremental IRR =% (Round to the nearest one decimal place);
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. Project 1 $14,600 $3,901 Present Worth (PW) $2,767 Initial cost Annual revenues 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) Project 2 $22,100 $5,638 $2,999 c. Perform the incremental IRR analysis to determine the project that is more economical: Incremental IRR =% (Round to the nearest one decimal place);
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
![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.
Project 1
$14,600
$3,901
Present Worth (PW) $2,767
Initial cost
Annual revenues
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)
Project 2
$22,100
$5,638
$2,999
c. Perform the incremental IRR analysis to determine the project that is more economical:
Incremental IRR =% (Round to the nearest one decimal place);](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3fc923da-597d-435e-8082-d40f278cf098%2Ff4366776-f7a1-4e24-8129-ac5982847b70%2Ft1yr8xg_processed.jpeg&w=3840&q=75)
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.
Project 1
$14,600
$3,901
Present Worth (PW) $2,767
Initial cost
Annual revenues
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)
Project 2
$22,100
$5,638
$2,999
c. Perform the incremental IRR analysis to determine the project that is more economical:
Incremental IRR =% (Round to the nearest one decimal place);
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
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 5 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![Principles of Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781305585126/9781305585126_smallCoverImage.gif)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Managerial Economics: A Problem Solving Approach](https://www.bartleby.com/isbn_cover_images/9781337106665/9781337106665_smallCoverImage.gif)
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
![Managerial Economics & Business Strategy (Mcgraw-…](https://www.bartleby.com/isbn_cover_images/9781259290619/9781259290619_smallCoverImage.gif)
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education