Problem 1: Four design alternatives were proposed. Each design alternative has unique costs and benefits. Given the information for the four mutually exclusive in the table below, recommend the best altemative using the incremental B/C ratio analysis method knowing that the MARR is 6%. (Use the PW in your calculation) Alternative 3. 4 12500 Capital investment cost $ 11000 12500 16800 Annual operating 120 and maintenance cost $ 480 450 140 Annual utility 580 700 950 1300 savings $ Annual revenue $ 700 550 200 250 Annual benefit S other 400 750 150 500 Project life in 40 40 40 40 years
Problem 1: Four design alternatives were proposed. Each design alternative has unique costs and benefits. Given the information for the four mutually exclusive in the table below, recommend the best altemative using the incremental B/C ratio analysis method knowing that the MARR is 6%. (Use the PW in your calculation) Alternative 3. 4 12500 Capital investment cost $ 11000 12500 16800 Annual operating 120 and maintenance cost $ 480 450 140 Annual utility 580 700 950 1300 savings $ Annual revenue $ 700 550 200 250 Annual benefit S other 400 750 150 500 Project life in 40 40 40 40 years
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Problem 1: Four design alternatives were proposed. Each design alternative has unique costs and
benefits. Given the information for the four mutually exclusive in the table below, recommend the
best altemative using the incremental B/C ratio analysis method knowing that the MARR is 6%.
(Use the PW in your calculation)
Alternative
3.
4
12500
Capital
investment cost $
11000
12500
16800
Annual operating 120
and maintenance
cost $
480
450
140
Annual
utility 580
700
950
1300
savings $
Annual revenue $ 700
550
200
250
Annual
benefit S
other 400
750
150
500
Project life in 40
40
40
40
years
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