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Six mutually exclusive projects A, B, C, D, E, and F, are being considered by ABC Inc. They all have 20 years of project life and have been ordered by first costs so that project A has the lowest first cost, project F the largest. Specifically, detailed cash flows for Projects A is given below. Project A: Initial Cost of $630,000. annual benefit of $70,000 for 20 years The table below apply to all projects (A through F). The data can be interpreted as follows: the IRR on the incremental investment from project C to D is 11.8%. Which project should be chosen using MARR of 12%? IRR on overall IRR on Increments of Investment Project Compared With Project Investment A B D E A 11.80% 12.50% 12.30% 11.00% 11.20% 12.1% 13.0% 12.2% 12.2% D 11.8% 12.1% 7% E F 14% 10% 11,5% 11.2% 9.8% 9.7% 9% 8.50% O Project B O Project C O Project D O Project E O Project F

Six mutually exclusive projects A, B, C, D, E, and F, are being considered by ABC Inc. They all have 20 years of project life and have been ordered by first costs so that project A has the lowest first cost, project F the largest. Specifically, detailed cash flows for Projects A is given below. Project A: Initial Cost of $630,000. annual benefit of $70,000 for 20 years The table below apply to all projects (A through F). The data can be interpreted as follows: the IRR on the incremental investment from project C to D is 11.8%. Which project should be chosen using MARR of 12%? IRR on overall IRR on Increments of Investment Project Compared With Project Investment A B D E A 11.80% 12.50% 12.30% 11.00% 11.20% 12.1% 13.0% 12.2% 12.2% D 11.8% 12.1% 7% E F 14% 10% 11,5% 11.2% 9.8% 9.7% 9% 8.50% O Project B O Project C O Project D O Project E O Project F

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Six mutually exclusive projects A, B, C, D, E, and F, are being considered by ABC Inc. They all have 20 years of project life and have been ordered by first costs so that project A has the lowest first cost, project F the largest. Specifically, detailed cash flows for Projects A is given below. Project A: Initial Cost of $630,000. annual benefit of $70,000 for 20 years The table below apply to all projects (A through F). The data can be interpreted as follows: the IRR on the incremental investment from project C to D is 11.8%. Which project should be chosen using MARR of 12%? IRR on IRR on Increments of Investment Project overall Compared With Project Investment A В C D E A ? B 11.80% 12.1% 12.50% 13.0% 12.2% 12.30% 12.2% 12.1% 11.8% 7% 9% E 11.00% 14% 11.5% 9.8% 11.20% 10% 11.2% 9.7% 8.50% O Project B O Project C O Project D O Project E O Project F
Transcribed Image Text:Six mutually exclusive projects A, B, C, D, E, and F, are being considered by ABC Inc. They all have 20 years of project life and have been ordered by first costs so that project A has the lowest first cost, project F the largest. Specifically, detailed cash flows for Projects A is given below. Project A: Initial Cost of $630,000. annual benefit of $70,000 for 20 years The table below apply to all projects (A through F). The data can be interpreted as follows: the IRR on the incremental investment from project C to D is 11.8%. Which project should be chosen using MARR of 12%? IRR on IRR on Increments of Investment Project overall Compared With Project Investment A В C D E A ? B 11.80% 12.1% 12.50% 13.0% 12.2% 12.30% 12.2% 12.1% 11.8% 7% 9% E 11.00% 14% 11.5% 9.8% 11.20% 10% 11.2% 9.7% 8.50% O Project B O Project C O Project D O Project E O Project F
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