Q1: Three mutually exclusive alternatives X, Y, and Z are being considered as a permanent solution to an assembly line bottleneck. The data are: Y Initial Cost $10k $15k $20k Annual Benefit 1.6k 1.5k 1.9k Useful Life (years) 5 10 15 • As a prefix in SI units, k is an acronym for kilo, meaning 1,000.

Q1: Three mutually exclusive alternatives X, Y, and Z are being considered as a permanent solution to an assembly line bottleneck. The data are: Y Initial Cost $10k $15k $20k Annual Benefit 1.6k 1.5k 1.9k Useful Life (years) 5 10 15 • As a prefix in SI units, k is an acronym for kilo, meaning 1,000.

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

Q1: Three mutually exclusive alternatives X, Y, and Z are being considered as a
permanent solution to an assembly line bottleneck. The data are:
Y
Initial Cost
$10k
$15k
$20k
Annual Benefit
1.6k
1.5k
1.9k
Useful Life (years)
5
10
15
• As a prefix in SI units, k is an acronym for kilo, meaning 1,000.
Assuming zero salvage value and an annually compounded interest rate of 8% per
year, which alternative should be selected based on the AW-criterion? ( Show detailed
calaculations).

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