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Mowbot Company is evaluating several alternatives for its next new product. Cost and revenue estimates are as follows: Alternative A B C D Up front cost $ (600,000) $ (800,000) (470,000) $ (540,000) Residual value $ 70,000 S 130,000 $ 65,000 S 200,000 Annual revenue $ Annual cost $ (130,000) 400,000 $ S 600,000 $ 260,000 $ 320,000 (27,000) S (70,000) $ (120,000) Life (years) 10 10 10 10 In addition, doing nothing is an alternative. Mowbot evaluates projects based on a MARR of 20%. Use INCREMENTAL PRESENT WORTH ANALYSIS to determine which, if any, alternative to pursue. Show all calculations.

Mowbot Company is evaluating several alternatives for its next new product. Cost and revenue estimates are as follows: Alternative A B C D Up front cost $ (600,000) $ (800,000) (470,000) $ (540,000) Residual value $ 70,000 S 130,000 $ 65,000 S 200,000 Annual revenue $ Annual cost $ (130,000) 400,000 $ S 600,000 $ 260,000 $ 320,000 (27,000) S (70,000) $ (120,000) Life (years) 10 10 10 10 In addition, doing nothing is an alternative. Mowbot evaluates projects based on a MARR of 20%. Use INCREMENTAL PRESENT WORTH ANALYSIS to determine which, if any, alternative to pursue. Show all calculations.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Mowbot Company is evaluating several alternatives for its next new product. Cost and revenue estimates are as follows: Alternative A B C D Up front cost $ (600,000) $ (800,000) (470,000) $ (540,000) Residual value $ 70,000 S 130,000 $ 65,000 S 200,000 Annual revenue $ Annual cost $ (130,000) 400,000 $ S 600,000 $ 260,000 $ 320,000 (27,000) S (70,000) $ (120,000) Life (years) 10 10 10 10 In addition, doing nothing is an alternative. Mowbot evaluates projects based on a MARR of 20%. Use INCREMENTAL PRESENT WORTH ANALYSIS to determine which, if any, alternative to pursue. Show all calculations.
Transcribed Image Text:Mowbot Company is evaluating several alternatives for its next new product. Cost and revenue estimates are as follows: Alternative A B C D Up front cost $ (600,000) $ (800,000) (470,000) $ (540,000) Residual value $ 70,000 S 130,000 $ 65,000 S 200,000 Annual revenue $ Annual cost $ (130,000) 400,000 $ S 600,000 $ 260,000 $ 320,000 (27,000) S (70,000) $ (120,000) Life (years) 10 10 10 10 In addition, doing nothing is an alternative. Mowbot evaluates projects based on a MARR of 20%. Use INCREMENTAL PRESENT WORTH ANALYSIS to determine which, if any, alternative to pursue. Show all calculations.
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