The following information is provided for five mutually exclusive alternatives that have 20-year useful lives. If the MARR is 12%, which alternative be selected? Use incremental rate of return Alternatives A B D E Cost $4,000 $2,000 $6,000 $1,000 $9,000 Annual Benefit $639 $410 $761 $117 $785 PW of Benefit $7,330 $4,700 $8,730 $1,340 $9,000 Rate of Return 15% 20% 11% 10% 6%

The following information is provided for five mutually exclusive alternatives that have 20-year useful lives. If the MARR is 12%, which alternative be selected? Use incremental rate of return Alternatives A B D E Cost $4,000 $2,000 $6,000 $1,000 $9,000 Annual Benefit $639 $410 $761 $117 $785 PW of Benefit $7,330 $4,700 $8,730 $1,340 $9,000 Rate of Return 15% 20% 11% 10% 6%

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A mechanical device will cost $20,000 when purchased. Maintenance will cost $1,000 per year. The device will generate revenues of $5,000 per year for 5 years. The salvage value is $7000. Draw the following: (A) Complete cash flow diagram (B) Simplified cash flow diagram.
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