Example 6 Use the incremental analysis procedure to select the best alternative. DN is not an option. Design 1 Design 2 Design 3 Design 4 Investment $100,000 40,600 148,200 122,000 Annual Expenses $29,000 6,900 14,800 22,100 Useful Life 5 5 5 5 SV $10.000 14.000 25.600 14.000

Example 6 Use the incremental analysis procedure to select the best alternative. DN is not an option. Design 1 Design 2 Design 3 Design 4 Investment $100,000 40,600 148,200 122,000 Annual Expenses $29,000 6,900 14,800 22,100 Useful Life 5 5 5 5 SV $10.000 14.000 25.600 14.000

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

100%

The investment of design 2 is supposed to be $140600. The MARR to be used in the problem is 20%.

Example 6
Use the incremental analysis procedure to select the best alternative. DN is not an option.
Design 1 Design 2
Design 3
Design 4
Investment
$100,000 40,600
148,200
122,000
Annual Expenses $29,000
6,900
14,800
22,100
Useful Life
5
5
5
5
SV
$10,000
14,000
25,600
14,000

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Step 1: State the given information

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Step 2: Calculate using the FW method incremental analysis (D1&D2)

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Step 3: Calculate using the FW method incremental analysis (D3 and D4)

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