The estimated negative cash flows for three design alternatives are shown below. The MARR is 10% per year and thestudy period is four years. Which alternative is best based on the IRR method? Doing nothing is not an option.A. Alternative BOB. Alternative COC. Alternative ACapitalinvestmentAnnual expensesEOY0IRR A(1-4A$85,7008,500AlternativeB$64,500Which alternative would you choose as a base one? Choose the correct answer below.15,150Analyze the difference between the base alternative and the second-choice alternative.7)=[ %. (Round to two decimal places.)C$71,90012,450

Incremental rate of return shows how much one is going to receive because of incurring the extra…

The estimated negative cash flows for three design alternatives are shown below. The MARR is 10% per year and the study period is four years. Which alternative is best based on the IRR method? Doing nothing is not an option.

The estimated negative cash flows for three design alternatives are shown below. The MARR is 10% per year and the study period is four years. Which alternative is best based on the IRR method? Doing nothing is not an option.

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

The estimated negative cash flows for three design alternatives are shown below. The MARR is 10% per year and the
study period is four years. Which alternative is best based on the IRR method? Doing nothing is not an option.
A. Alternative B
OB. Alternative C
OC. Alternative A
Capital
investment
Annual expenses
EOY
0
IRR A(
1-4
A
$85,700
8,500
Alternative
B
$64,500
Which alternative would you choose as a base one? Choose the correct answer below.
15,150
Analyze the difference between the base alternative and the second-choice alternative.
7)=[ %. (Round to two decimal places.)
C
$71,900
12,450

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