Question 3.4 (15pts) Consider the following two mutually exclusive projects: a What assumption(s) do you need in order to compare a set of mutually exclusive service projects with unequal service lives? b With the assumption(s) defined in part (a) and using 10%, determine which project should be selected. c If your analysis period (study period) is just 4 years, what would be the salvage value of project 42 at the end of year 4 to make the two alternatives economically indifferent? Question 3.4 (15pts) Consider the following two mutually exclusive projects: Year A1 0 -$1,800 A2 -$3,600 1 -$500 -$ 600 2 -$500 - $600 3 -$500 - $600 4 -$500 - $600 5 $ 500+400 - $600 6 - $600 - $600 $600+1000 7 8 a What assumption(s) do you need in order to compare a set of mutually exclusive service projects with unequal service lives? b With the assumption(s) defined in part (a) and using 10 %, determine which project should be selected. c If your analysis period (study period) is just 4 years, what would be the salvage value of project A2 at the end of year 4 to make the two alternatives economically indifferent?
Question 3.4 (15pts) Consider the following two mutually exclusive projects: a What assumption(s) do you need in order to compare a set of mutually exclusive service projects with unequal service lives? b With the assumption(s) defined in part (a) and using 10%, determine which project should be selected. c If your analysis period (study period) is just 4 years, what would be the salvage value of project 42 at the end of year 4 to make the two alternatives economically indifferent? Question 3.4 (15pts) Consider the following two mutually exclusive projects: Year A1 0 -$1,800 A2 -$3,600 1 -$500 -$ 600 2 -$500 - $600 3 -$500 - $600 4 -$500 - $600 5 $ 500+400 - $600 6 - $600 - $600 $600+1000 7 8 a What assumption(s) do you need in order to compare a set of mutually exclusive service projects with unequal service lives? b With the assumption(s) defined in part (a) and using 10 %, determine which project should be selected. c If your analysis period (study period) is just 4 years, what would be the salvage value of project A2 at the end of year 4 to make the two alternatives economically indifferent?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
![Question 3.4 (15pts) Consider the following two mutually exclusive projects: a What assumption(s) do you need in order
to compare a set of mutually exclusive service projects with unequal service lives? b With the assumption(s) defined in
part (a) and using 10%, determine which project should be selected. c If your analysis period (study period) is just 4
years, what would be the salvage value of project 42 at the end of year 4 to make the two alternatives economically
indifferent?
Question 3.4 (15pts) Consider the following two mutually exclusive projects:
Year
A1
0
-$1,800
A2
-$3,600
1
-$500
-$ 600
2
-$500
- $600
3
-$500
- $600
4
-$500
- $600
5
$ 500+400
- $600
6
- $600
- $600
$600+1000
7
8
a What assumption(s) do you need in order to compare a set of mutually exclusive service
projects with unequal service lives?
b With the assumption(s) defined in part (a) and using 10 %, determine which project should
be selected.
c If your analysis period (study period) is just 4 years, what would be the salvage value of
project A2 at the end of year 4 to make the two alternatives economically indifferent?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Faea85768-f2c5-4a80-a773-be9d985e4ea6%2Fba9416cc-ab77-4025-8132-d64207050510%2Ft7c3epc_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Question 3.4 (15pts) Consider the following two mutually exclusive projects: a What assumption(s) do you need in order
to compare a set of mutually exclusive service projects with unequal service lives? b With the assumption(s) defined in
part (a) and using 10%, determine which project should be selected. c If your analysis period (study period) is just 4
years, what would be the salvage value of project 42 at the end of year 4 to make the two alternatives economically
indifferent?
Question 3.4 (15pts) Consider the following two mutually exclusive projects:
Year
A1
0
-$1,800
A2
-$3,600
1
-$500
-$ 600
2
-$500
- $600
3
-$500
- $600
4
-$500
- $600
5
$ 500+400
- $600
6
- $600
- $600
$600+1000
7
8
a What assumption(s) do you need in order to compare a set of mutually exclusive service
projects with unequal service lives?
b With the assumption(s) defined in part (a) and using 10 %, determine which project should
be selected.
c If your analysis period (study period) is just 4 years, what would be the salvage value of
project A2 at the end of year 4 to make the two alternatives economically indifferent?
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