Engineering economics Alfredo Auto Parts has two options for increasing efficiency. It can expand the current building or keep the same building but remodel the inside layout. For a five-year study period, the cash flows for the two options are shown below. Construct a spreadsheet that will calculate the present worth for each option with a variable MARR. By trial and error, determine the MARR at which the present worths of the two options are equivalent Expansion Option Year 0 1 2 3 4 5 Disburse- ments $850 000 25 000 30 000 35.000 40 000 45 000 Net Cash Flow 0 - $850 000 175 000 195 000 215 000 235 000 255 000 Receipts S 200 000 225 000 250 000 275 000 300 000 Remodelling Option Disburse- ments $230 000 9000 11 700 15 210 19 773 25 705 Receipts Net Cash Flow $0-$230 000 71 000 68 300 64 790 60 227 54 295 80 000 80 000 80 000 80 000 80 000

Engineering economics Alfredo Auto Parts has two options for increasing efficiency. It can expand the current building or keep the same building but remodel the inside layout. For a five-year study period, the cash flows for the two options are shown below. Construct a spreadsheet that will calculate the present worth for each option with a variable MARR. By trial and error, determine the MARR at which the present worths of the two options are equivalent Expansion Option Year 0 1 2 3 4 5 Disburse- ments $850 000 25 000 30 000 35.000 40 000 45 000 Net Cash Flow 0 - $850 000 175 000 195 000 215 000 235 000 255 000 Receipts S 200 000 225 000 250 000 275 000 300 000 Remodelling Option Disburse- ments $230 000 9000 11 700 15 210 19 773 25 705 Receipts Net Cash Flow $0-$230 000 71 000 68 300 64 790 60 227 54 295 80 000 80 000 80 000 80 000 80 000

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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