9-54 Three mutually exclusive alternatives are beingAconsidered:AInitial cost$500Benefit at end of the first 200yearUniform benefit at end ofsubsequent yearsUseful life, in years1006B$4002001255с$300200(a) Based on the payback period?(b) Based on benefit-cost ratio analysis?1004At the end of its useful life, an alternative is notreplaced. If the MARR is 10%, which alternativeshould be selected

The discounted payback period is a variation of the traditional payback period used in capital…

Three mutually exclusive alternatives are being considered: Initial cost Benefit at end of the first year Uniform benefit at end of subsequent years 6.1 1:6ea in voors A $500 200 100 6 B $400 200 с $300 200 125 100 V

Three mutually exclusive alternatives are being considered: Initial cost Benefit at end of the first year Uniform benefit at end of subsequent years 6.1 1:6ea in voors A $500 200 100 6 B $400 200 с $300 200 125 100 V

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

9-54 Three mutually exclusive alternatives are being
A
considered:
A
Initial cost
$500
Benefit at end of the first 200
year
Uniform benefit at end of
subsequent years
Useful life, in years
100
6
B
$400
200
125
5
с
$300
200
(a) Based on the payback period?
(b) Based on benefit-cost ratio analysis?
100
4
At the end of its useful life, an alternative is not
replaced. If the MARR is 10%, which alternative
should be selected

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Step 1: Define Discounted Payback Period

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