Consider these two alternatives. Capital investment Annual revenues Annual expenses Estimated market value Useful life C Alternative 1 Alternative 2 $4,500 $1,600 $390 $900 8 years a. Suppose that the capital investment of Alternative 1 is known with certainty. By how much would the estimate of capital investment for Alternative 2 have to vary so that the initial decision based on these data would be reversed? The annual MARR is 18 % per year. b. Determine the life of Alternative 1 for which the AWs are equal. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 18% per year. a. The capital investment of Alternative 2 would have to be $ or less for the initial decision to be reversed. (Round to the nearest dollar.) $6,200 $2,000 $520 $1,150 9 years

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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Subject: ec

NIN3600 34
1
2
4
5
7
8
9
10
11
12
13
14
15
Single Payment
Compound
Amount
Present
Factor Worth Factor
To Find F
Given P
FIP
1.1800
1.3924
1.6430
1.9388
2.2878
2.6996
3.1855
3.7589
Discrete Compounding; i = 18%
4.4355
5.2338
6.1759
7.2876
8.5994
10.1472
11.9737
To Find P
Given F
PIF
0.8475
0.7182
0.6086
0.5158
0.4371
0.3704
0.3139
0.2660
0.2255
0.1911
0.1619
0.1372
0.1163
0.0985
0.0835
Compound
Amount
Factor
To Find F
Given A
FIA
1.0000
2.1800
3.5724
5.2154
7.1542
9.4420
12.1415
15.3270
19.0859
23.5213
28.7551
34.9311
42.2187
50.8180
60.9653
Uniform Series
Present
Worth Factor
To Find P
Given A
PIA
0.8475
1.5656
2.1743
2.6901
3.1272
3.4976
3.8115
4.0776
4.3030
4.4941
4.6560
4.7932
4.9095
5.0081
5.0916
Sinking
Fund
Factor
To Find A
Given F
A/F
1.0000
0.4587
0.2799
0.1917
0.1398
0.1059
0.0824
0.0652
0.0524
0.0425
0.0348
0.0286
0.0237
0.0197
0.0164
Capital
Recovery
Factor
To Find A
Given P
AIP
1.1800
0.6387
0.4599
0.3717
0.3198
0.2859
0.2624
0.2452
0.2324
0.2225
0.2148
0.2086
0.2037
0.1997
0.1964
Transcribed Image Text:NIN3600 34 1 2 4 5 7 8 9 10 11 12 13 14 15 Single Payment Compound Amount Present Factor Worth Factor To Find F Given P FIP 1.1800 1.3924 1.6430 1.9388 2.2878 2.6996 3.1855 3.7589 Discrete Compounding; i = 18% 4.4355 5.2338 6.1759 7.2876 8.5994 10.1472 11.9737 To Find P Given F PIF 0.8475 0.7182 0.6086 0.5158 0.4371 0.3704 0.3139 0.2660 0.2255 0.1911 0.1619 0.1372 0.1163 0.0985 0.0835 Compound Amount Factor To Find F Given A FIA 1.0000 2.1800 3.5724 5.2154 7.1542 9.4420 12.1415 15.3270 19.0859 23.5213 28.7551 34.9311 42.2187 50.8180 60.9653 Uniform Series Present Worth Factor To Find P Given A PIA 0.8475 1.5656 2.1743 2.6901 3.1272 3.4976 3.8115 4.0776 4.3030 4.4941 4.6560 4.7932 4.9095 5.0081 5.0916 Sinking Fund Factor To Find A Given F A/F 1.0000 0.4587 0.2799 0.1917 0.1398 0.1059 0.0824 0.0652 0.0524 0.0425 0.0348 0.0286 0.0237 0.0197 0.0164 Capital Recovery Factor To Find A Given P AIP 1.1800 0.6387 0.4599 0.3717 0.3198 0.2859 0.2624 0.2452 0.2324 0.2225 0.2148 0.2086 0.2037 0.1997 0.1964
Consider these two alternatives.
Alternative 1 Alternative 2
$4,500
$1,600
$390
$900
8 years
Capital investment
$6,200
$2,000
$520
Annual revenues
Annual expenses
Estimated market value
Useful life
$1,150
9 years
a. Suppose that the capital investment of Alternative 1 is known with certainty. By how much would the estimate of capital investment for Alternative 2 have to vary so that the initial decision based on these data would be reversed? The annual MARR is 18% per year.
b. Determine the life of Alternative 1 for which the AWs are equal.
Click the icon to view the interest and annuity table for discrete compounding when the MARR is 18% per year.
a. The capital investment of Alternative 2 would have to be $ or less for the initial decision to be reversed. (Round to the nearest dollar.)
Transcribed Image Text:Consider these two alternatives. Alternative 1 Alternative 2 $4,500 $1,600 $390 $900 8 years Capital investment $6,200 $2,000 $520 Annual revenues Annual expenses Estimated market value Useful life $1,150 9 years a. Suppose that the capital investment of Alternative 1 is known with certainty. By how much would the estimate of capital investment for Alternative 2 have to vary so that the initial decision based on these data would be reversed? The annual MARR is 18% per year. b. Determine the life of Alternative 1 for which the AWs are equal. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 18% per year. a. The capital investment of Alternative 2 would have to be $ or less for the initial decision to be reversed. (Round to the nearest dollar.)
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