The following four alternative investments are being compared at MARR of 12%. Which investment is the most economical over the entire service life? Alt. L Alt. D Alt. W 10 $645,000 10 $590,000 10 $495,000 14.2% 9 13.4% 15% 5 Service life (years) Net PW IRR Disc payback period (yrs) Alt X 10 $533,000 16.2% OA. Alternative D because it has the longest payback period OB. Alternative W because it has the highest net PW OC. Alternative L because it has the shortest payback period OD. Alternative X because it has the highest IRR

The following four alternative investments are being compared at MARR of 12%. Which investment is the most economical over the entire service life? Alt. L Alt. D Alt. W 10 $645,000 10 $590,000 10 $495,000 14.2% 9 13.4% 15% 5 Service life (years) Net PW IRR Disc payback period (yrs) Alt X 10 $533,000 16.2% OA. Alternative D because it has the longest payback period OB. Alternative W because it has the highest net PW OC. Alternative L because it has the shortest payback period OD. Alternative X because it has the highest IRR

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 following four alternative investments are being compared at MARR of 12%. Which investment is the most economical over the entire service life?
Alt. L
Alt. W
10
10
$590,000
$645,000
Alt. D
10
$495,000
14.2%
9
13.4%
15%
6
5
Service life (years)
Net PW
IRR
Disc payback period (yrs)
Alt. X
10
$533,000
16.2%
8
OA. Alternative D because it has the longest payback period
OB. Alternative W because it has the highest net PW
OO
C. Alternative L because it has the shortest payback period
OD. Alternative X because it has the highest IRR

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