4-10 Improvement and expansion of a production facility are being giveneconomic consideration. At the present time (Alternative A), profitsare running at $450,000 per year. Assume a washout in operatingprofit in cach of years one through 10 so they will remain constant at$450,000 per year. Two mutually exclusive alternatives for improve-ment and improvement combined with expansion are being consid-ered with projected costs and revenues as shown on the following timediagrams with all dollar values expressed in thousands of dollars.450450450A).........0.210...-800700700700B)2... 10850-900C)-1,3001,0501,0501..... 101) For a minimum rate of return of 15% determine whether thepresent project "A," improvement project "B," or improvementplus expansion project "C" is economically best using ROR, NPV,and PVR.2) Then increase the minimum ROR to 25% from 15% over theentire 10-year evaluation life and re-evaluate the alternatives usingboth ROR and NPV analysis.

Given, There are three projects given A, B, and C and every project has three option @ 15% rate…

Answered: Improvement and expansion of a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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FOLLOW THE INSTRUCTIONS DO THIS TYPEWRITTEN AND WITH COMPLETE SOLUTIONS. NO UPVOTE FOR HANDWRITTEN. I WILL UPVOTE. DOWNVOTE IF INCOMPLETE AND SHORTCUT. ALSO, SKIP IF YOU ALREADY DID THIS OTHERWISE DOWNVOTE TOO. THANK YOU
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