Design EOY ER1 ER2 ER3 -$115,000 -$98,600 25,800 -$81,200 19,750 1 29,000 2 3 = 6%ª G= $150 4 34,526 29,750 19,750 a After year one, the annual savings are estimated to increase at the rate of 6% per year. b After year one, the annual savings are estimated to increase $150 per year. C Uniform sequence of annual savings.
Design EOY ER1 ER2 ER3 -$115,000 -$98,600 25,800 -$81,200 19,750 1 29,000 2 3 = 6%ª G= $150 4 34,526 29,750 19,750 a After year one, the annual savings are estimated to increase at the rate of 6% per year. b After year one, the annual savings are estimated to increase $150 per year. C Uniform sequence of annual savings.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
The alternatives for an engineering project to recover most of the energy presently being lost in the primary cooling stage of a chemical processing
system have been reduced to three designs. The estimated capital investment amounts and annual expense savings are as follows: Assume that theMARR is 12% per year, the study period is six years, and the market value is zero for all three designs. Apply an incremental analysis method to determine the preferred alternative.
Transcribed Image Text:Design
EOY
ER1
ER2
ER3
-$115,000
-$98,600
25,800
-$81,200
19,750
1
29,000
2
3
= 6%ª
G= $150
4
34,526
29,750
19,750
a After year one, the annual savings are estimated to increase
at the rate of 6% per year.
b
After year one, the annual savings are estimated to increase
$150 per year.
C Uniform sequence of annual savings.
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