The MARR is 15%. Three alternatives are available and the associated cash flow is as follow:YearFirst CostABC$1,700 $2,100 $3,750Annual BenefitUseful Life2$1,000 $1,000 $1,00036Answer the following in this format: 1.231. The payback period for Alternative A is2. The payback period for Alternative B is3. The payback period for Alternative C isBased on Payback period analysis, Alternativeshould be selected. (Enter only the letter)

The objective of the question is to calculate the payback period for each alternative and then…

Answered: The MARR is 15%. Three alternatives are…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Problem 1 Two mutually exclusive alternatives are being considered for a site equipment at a petroleum refinery. One of these alternatives must be selected. The firm's MARR is 9% per year. The estimated cash flows for each alternative are below. If the repeatability assumption is made, which alternative is better and what is the AW of the selected alternative? Please round your answer to the nearest integer. Equipment A: • Investment Cost: $77,000 • Annual Revenue: $21,000 • Market Value: $11,000 Useful Life: 9 Years Equipment B: Investment Cost: $28,000 • Annual Revenue: $20,000 • Market Value: $8,000 • Useful Life: 6 Years
In case of high interest rate, the best suitable method of analysis is: Select one: a. future worth analysis b. present worth analysis c. annual worth analysis d. incremental analysis
Calculate the annual net benefit from the given project summary. Capital Costs = $43,000; Revenue = $16,000/year; Operation and Maintenance Costs = $7,800/year Salvage Value = $19,000; Project Lifetime = 6 years; Effective Interest Rate = 0.09.
Problem #4 (3/10): Six mutually exclusive projects A, B, C, D, E, and F, are being considered by XYZ. They have been ordered by first costs so that project A has the lowest first cost, project F the largest. Detailed cash flows for Projects A and B are given below. (MARR is 10%) Project A: Initial Cost of $323,120. annual benefit of $50,000 for 15 years Project B: Initial Cost of $494,310. annual benefit of $70,000 for 15 years (a) Based on the cash flows and the MARR of 10%, what is the IRR for Project A? (b) Based on the cash flows, calculate the IRR for the increment from A to B. (c) 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 13%.. Which project should be selected? IRR on Increments of Investment Project A BCDEF IRR on overall Investment ? 11% 11% 13% 19% 15% A ? 9% 11% 16% 10.5% B 11% 15% 16% 14% Compared with Project с 13% 14% 13% 9% 6% E 9.50%
Ginger has agreed to a lawsuit settlement of $700,000 with a certain pharmaceutical company. The company has offered options to pay her the awarded money. After discussing the terms with the company, she expects that the company should be able to pay her back within 3-5 years Ginger has developed the following estimates Option A B-Pessimistic CMost likely D.Optimistic Delay period 5 years 4 years 3years Cash Flow Estimates, S $700.000 now $151.000 per year for every year the payment is delayed $173.200 per year for every year the payment is delayed $234.500 per year for every year the payment is delayed If her personal MARR is 15% per year, what is the present worth of each of her options? Option A-PW: Option B- PW: Option C- PW: Option D PW: 2. With respect to her personal MARR, which option should she select?
Acme Tools has four alternatives for an injection molding machine (A, B, C, D) as shown below. MARR is 20%. Use incremental cash flow analysis to determine the economically optimal system. Solve this problem in Excel, copy and paste the Excel model below, and provide an interpretation. A B C D Capital Investment $295,000 $350,000 $310,000 $340,000 Net Annual Revenue $75,000 $90,000 $75,000 $85,000 Residual Value $60,000 $82,000 $96,000 $85,000 Study Period 6 Years 6 Years 6 Years 6 Years
For a certain potential investment project, we have the following estimates: Capital investment I Annual revenues R $100,000 $30.000 Annual expenses $9.000 Market value $10,000 Useful life 10 years MARR 15% a. Find the breakeven market value. b. Find the breakeven annual expense. c. Is the decision more sensitive to changes in market value or annual expense? How do you know?
There are three alternatives X,Y,Z. With 10% MARR, which alternative should be chosen based on following conditions and why? For X, initial cost is $10k, yearly revenue is $6K, Salvage is $1k and useful life is calculated as 2yrs. For Y, initial cost is $15k, yearly revenue is $10K, Salvage is -$2k and useful life is calculated as 3yrs. For Z, initial cost is $12k, yearly revenue is $5K, Salvage is $3k and useful life is calculated as 4yrs.
5) ) Use a MARR of 10%, useful life of 5 years and the Present Worth method to select between the investment alternatives below. Alternative A B Capital investment $90,000 $115,00 Annual revenues less $38,000 $45,000 expenses
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who is responsible for executing the budgetand plansdrawn up for a firm

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