For the following table, assume a MARR of 10% per year and a useful life for each alternative of six years that equalsthe study period. The rank-order of alternatives from least capital investment to greatest capital investment is DoNothing → A → C → B. Complete the IRR analysis by selecting the preferred alternative.A Capital investment▲ Annual revenuesΔ Annual costsA Market valueA IRRDo Nothing → A- $15,0004,000- 1,0006,00012.7%The IRR of A (C → B) is %. (Round to one decimal place.)What is the preferred alternative? Choose the correct answer below.O A. Alternative CO B. Alternative BC. Do nothingD. Alternative AA → C-$2,000900- 150-2,22010.5%C-B- $2,750450-753,400???

The objective of the question is to determine the preferred alternative based on the Internal Rate…

Answered: For the following table, assume a MARR…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Two electric motors (A and B) are being considered to drive a centrifugal pump. Each motor is capable of delivering 40 horsepower (output) to the pumping operation. It is expected that the motors will be in use 800 hours per year. If electricity costs $0.08 per kilowatt-hour and 1 hp = 0.746 kW, which motor should be selected if MARR = 6% per year? Refer to the data below. The AW for Motor A is $ Initial Cost Electrical Efficiency Annual Maintenance 5 years Click the icon to view the interest and annuity table for discrete compounding when the MARR is 6% per year. (Round to the nearest dollar.) Motor A $1,700 0.75 $50 Life Motor B $900 0.55 $80 5 years
Nadine Chelesvig has patented her invention. She is offering a potential manufacturer two contracts for the exclusive right to manufacture and market her product. Plan A calls for an immediate single lump sum payment to her of $175,000. Plan B calls for an annual payment of $14,000 plus a royalty of $3.90 per unit sold. The remaining life of the patent is 10 years. Nadine uses a MARR of 10%/year. What must be the uniform annual sales volume of the product for Nadine to be indifferent between the contracts, based on an units annual worth analysis? Carry all interim calculations to 5 decimal places and then round your final answer to the nearest unit. The tolerance is ±10.
Compare three alternatives on the basis of their capitalized costs at i=9.00% per year and select the best alternative. (Include a minus sign if necessary.) The capitalized cost of alternative E is $ ox, alternative F is $1375347.55, and alternative G is $ The best alternative is
MARR is 10% per year. Compare the two plans using the Capitalized Cost Method. The first plan calls for an initial investment of $500,000, with expenses of $20,000 per year for the first 20 years and $30,000 per year thereafter. It also requires an expenditure of $200,000 20 years after the initial investment, and this will repeat every 20 years thereafter. The second plan has an initial investment of $700,000 followed by a single (one time) investment of $300,000 30 years later. It will incur annual expenses of $10,000 forever. Based on the Capitalized Cost measure.Which plan would you recommend?
Fiesta Foundry is considering a new furnace that will allow them to be more productive. Three alternative furnaces are under consideration. Perform an incremental analysis of these alternatives using the IRR method for each increment of cash flows. The MARR is 14% per year.
Beaver, a city in the United States, is attempting to attract a professional soccer team. Beaver is planning to build a new stadium that will cost $240 million. The annual upkeep is expected to amount to $830,000. The turf will have to be replaced every 9 years at a cost of $860,000. Painting every 8 years will cost $88,000. If the city expects to maintain the facility indefinitely, what is the estimated capitalized cost at i = 9% per year? The estimated capitalized cost is $
Two roadway designs are under consideration for access to a permanent suspension bridge. Design 1A will cost $3 million to build and $100,000 per year to maintain. Design 1B will cost $3.5 million to build and $40,000 per year to maintain. Both designs are assumed to be permanent. Use an AWbased rate of return equation to determine (a) the breakeven ROR, and (b) which design is preferred at a MARR of 10% per year.
A large lithium-ion phosphate battery pack for an industrial application is expected to save $20,000 in annual energy expenses over its six-year life. For a three-year simple payback period, the permissible capital investment is $60,000. What is the internal rate of return on this $60,000 battery pack if it has a residual value of $10,000 at the end of six years? The MARR is 18% per year.
The cost of maintaining a certain permanent monument in Washington DC occurs as periodic outlays of $1, 000 every year and $5, 000 every 3 years. Calculate the capitalized cost of the maintenance using an interest rate of 10% per year. (Reminder: Capitalized Cost is the present equivalent value of an infinite payment series.)
A water supply cooperative plans to increase its water supply by 8.5 million gallons per day to meet increasing demand. One alternative is to spend $10 million to increase the size of an existing reservoir in an environmentally acceptable way. Added annual upkeep will be $25,000 for this option. A second option is to drill new wells and provide added pipelines for transportation to treatment facilities at an initial cost of $1.5 million and annual cost of $120,000. The reservoir is expected to last indefinitely, but the productive well life is only 10 years. Compare the alternatives at 5% per year.
Avian Air Cargo is considering an investment of $10,000,000 with life expectancy of 10 years and annual operating cost of $400,000 in Year 1 with an $50,000 per year starting in Year 2 through the life of the project. Avian Air Cargo anticipates a revenue stream of $2,500,000 per year for 20 years I 12%, what is the rate of return for this project and is it economically justified? It is NOT economically justified because the rate of return is between 14% and 15%. It IS economically justified because the rate of return is between 10% and 11%. It is NOT economically justified because the rate of return is between 10% and 11%. It IS economically justified because the rate of return is between 14% and 15% of MARR
Dupont is considering licensing a low liquid discharge (LLD) water treatment system from a small company that developed the process and owns the license. Dupont can purchase a 1-year option for $100,000 that will provide time to pilot test the LLD process or Dupont can acquire the license now at a cost of $1.8 million plus 25% of sales paid annually to the license owner. If they wait 1 year, the cost will increase to $1.9 million plus 30% of sales paid annually. If sales are estimated to be $1,000,000 per year over the 5-year license period, should Dupont purchase the license now or purchase the option now and possibly license it after the 1-year test period? Assume the MARR is 15% per year.

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