Initial Cost, $ Uniform annual benefit, $ per year A $770.00 420.00 Useful life, years 2 B 1406.30 830.00 4 C 2563.30 1600.00 8 D 0 0 0 The analysis period is 8 years. At the end of 2, 4, and 6 years, Alt. A will have an identical replacement. Alternative B will have a single identical replacement at the end of 4 years. Choose the best alternative using incremental ROR analysis with MARR = 7%.

Initial Cost, $ Uniform annual benefit, $ per year A $770.00 420.00 Useful life, years 2 B 1406.30 830.00 4 C 2563.30 1600.00 8 D 0 0 0 The analysis period is 8 years. At the end of 2, 4, and 6 years, Alt. A will have an identical replacement. Alternative B will have a single identical replacement at the end of 4 years. Choose the best alternative using incremental ROR analysis with MARR = 7%.

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

4. Consider four mutually exclusive alternatives:
Initial Cost, $
A
$770.00
Uniform annual
benefit, $ per 420.00
year
B
1406.30
830.00
с
4
2563.30
1600.00
D
8
0
Useful life, years 2
The analysis period is 8 years. At the end of 2, 4, and 6 years, Alt. A will have an identical replacement. Alternative B will
have a single identical replacement at the end of 4 years. Choose the best alternative using incremental ROR analysis
with MARR = 7%.
0
0

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Step 1: Calculate the Present Worth (PW) for Each Alternative:

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Step 2: Alternative A:

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Step 3: Alternative B:

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Step 4: Alternative C:

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Step 5: Alternative D:

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Step 6: Perform Incremental ROR Analysis:

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