Two investment projects are being evaluated based on their payback periods. The first alternative requires an initial inves of $760,000, has gross revenues of $118,000, annual O&M costs of $23,000 and a service life of 20 years. What is the project's discounted payback period if the MARR is 8% per year? OA. 8.3 years OB. 13.3 years O C. 16.7 years O D. 9.4 years If the second alternative has a payback period of 8 years, which alternative should be preferred based on the payback per OA. The first alternative B. The second alternative

Two investment projects are being evaluated based on their payback periods. The first alternative requires an initial inves of $760,000, has gross revenues of $118,000, annual O&M costs of $23,000 and a service life of 20 years. What is the project's discounted payback period if the MARR is 8% per year? OA. 8.3 years OB. 13.3 years O C. 16.7 years O D. 9.4 years If the second alternative has a payback period of 8 years, which alternative should be preferred based on the payback per OA. The first alternative B. The second alternative

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Determine in how many hours each year the two motors must operate, in order to cost the two…

A: Given Data:MARR (Minimum Attractive Rate of Return) = 10% per yearOperating time: 1,000…

Q: Two investment projects are being evaluated based on their payback periods. The first alternative…

A: The objective of the question is to calculate the discounted payback period for the first investment…

Q: If Machine A has a NPW of $29,282 and Machine B has a NPW of $40,847 over an 8-year period, what is…

A: Given,Machine A NPW = $29,282Machine B NPW = $40,847

Q: The capitalized cost of a series of cash flows starting at the end of the first year with $7,500 and…

A: Capitalized cost is the cost which are including in the cost of the cost of the asset in the firm…

Q: PW analysis for one project refers to the value of all cash flows converted to a single sum…

A: In the mentioned question we have been asked what actually PW is and do the given statement is true…

Q: The following four alternative investments are being compared at MARR of 12%. Which investment is…

A: Net Present Value (NPV): This is the present value of cash inflows minus the present value of cash…

Q: MARR = 16% per year, and the alternatives are mutually exclusive. You are supposed to select:…

A: The rate of return (ROR) bills the person as much as the amount of profit or loss that accompany a…

Q: Using exactly the same information from Problem No. 1 above, calculate the Annual Worth of Project Y…

A: Present value refers to the value of a certain project or sum of money that is receivable in the…

Q: Consider the five investment alternatives described below. Which alternatives can be eliminated from…

A: Given that; There are 5 alternatives MARR = 10% life =5 Years The incremental internal rate of…

Q: Give proper answer without photo answer and take a like

A: To find the discounted payback period, we need to calculate the present value of the annual savings…

Q: The following mutually exclusive alternative investments are being compared at MARR of 8%. Alt. Y…

A: There are two mutually exclusive alternative investments X and Y. Each alternative has a service…

Q: Which alternative should be selected based on the incremental ROR analysis? Three mutually exclusive…

A: Given:

Q: A city is spending $20.7 million on a new sewage system. The expected life of the system is 50…

A: The capitalised cost or worth of a specific project or investment provides an approximation of the…

Q: For FW Method, if FW (i = MARR) = −30, then the project is economically _____________. justified…

A: In the financial and economy analysis, when talking about future worth, it is the analysis of the…

Q: A recent graduate who wants to start an excavation/earth-moving business is trying to determine…

A: A recent graduate must choose which size of secondhand dump truck to buy for his excavation and…

Q: Two mutually exclusive alternatives are being considered for company's use. One of these…

A: Given information Alternative 1 Initial investment = $20000 Annual cost=5500 Salvage value=$1000 n=5…

Q: The estimated negative cash flows for three design alternatives are shown below. The MARR is 13% per…

A: Cash flow:The sum of the total money is represented in the diagram. It represents the magnitude and…

Q: Part a Determine the ERR for this project. N 3 4 5 6 % $27 $27 $27 $27 $27

A: To calculate the Economic Rate of Return (ERR) for the given cash flow profile, we need to determine…

Q: Consider the following two mutually exclusive projects being considered by an agency. The agency's…

A: Project 1 Project 2 Initial Cost 14300 21500 Annual Revenue 3743 5399 PW 2363 2535

Q: 6.27 For each of the following scenarios, state whether an incremental investment analysis is…

A: The benchmark used to assess projects is the minimum acceptable rate of return (MARR), commonly…

Q: Option A: Building a New Wing 1. One-Time Costs: Land & site preparation: $10 million (Year 0)…

A: Present worth, also known as present value or discounted cash flow, is a financial concept that…

Q: Westdale Manufacturing is reviewing two mutually exclusive options for new equipment with a MARR of…

A: The objective of this question is to calculate the incremental rate of return (AIRR) for two…

Q: There are two alternatives P,M. With 15% MARR under 20 years study period, which alternative should…

A: Present value is the value of investment in today's dollar. Future value is the value of investment…

Question

Two investment projects are being evaluated based on their payback periods. The first alternative requires an initial investment
of $760,000, has gross revenues of $118,000, annual O &M costs of $23,000 and a service life of 20 years. What is
the project's discounted payback period if the MARR is 8% per year?
OA. 8.3 years
OB. 13.3 years
O C. 16.7 years
OD. 9.4 years
If the second alternative has a payback period of 8 years, which alternative should be preferred based on the payback period?
OA. The first alternative
OB. The second alternative

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Selection Of A Minimum Attractive Rate Of Return

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

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. Capital investment Annual expenses OA. Alternative B OB. Alternative C OC. Alternative A EOY 0 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 C $71,900 12,450
Can you compute the PW of alternative A, the AW of alternative B, the FW of Alternative C, and the PW of alternative D? Also for a MARR of 12%, rank the MEAs from most profitable to least profitable. HINT: You will need to perform additional calculations before answering this question.
Find the conventional payback period for the following project: First Cost $10,000 $500 in Year 1, increasing by $200/year $3,000/year $4,000 Maintenance Income Salvage Useful Life 10 years MARR 10%
Compare the alternatives below on the basis of their capitalized costs. Assume the MARR is 10% per year, compounded annually Project A Project B Project C First cost ($200,000) ($275,000) ($800,000) Annual income $60,000 $70,000 $80,000 Salvage value $40,000 $60,000 $500,000 Life, years 4 7 infinity
The product development group of a high-tech electronics company developed five proposals for new products. The company wants to expand its product offerings, so it will undertake all projects that are economically attractive at the company’s MARR of 20% per year. The cash flows (in $1000 units) associated with each project are estimated. Which projects, if any, should the company accept on the basis of a present worth analysis? Project A B C D E Initial investment, $ −400 −510 −660 −820 −900 Operating cost, $/year −100 −140 −280 −315 −450 Revenue, $/year 360 235 400 605 790 Salvage value, $ — 22 — 80 95 Life, years 3 10 5 8 4
The MARR is 15%. Three alternatives are available and the associated cash flow is as follow: Year First Cost A B C $1,700 $2,100 $3,750 Annual Benefit Useful Life 2 $1,000 $1,000 $1,000 3 6 Answer the following in this format: 1.23 1. The payback period for Alternative A is 2. The payback period for Alternative B is 3. The payback period for Alternative C is Based on Payback period analysis, Alternative should be selected. (Enter only the letter)
Two investment projects are being evaluated based on their payback periods. The first alternative requires an initial investment of $520,000, has gross revenues of $85,000, annual O&M costs of $17,000 and a service life of 23 years. What is the project's discounted payback period if the MARR is 10% per year? OA. 8.8 years OB. 19.1 years OC. 15.2 years OD. 9.9 years If the second alternative has a payback period of 20 years, which alternative should be preferred based on the payback period? OA. The second alternative OB. The first alternative
Answer part A Answer part B
A $45,000 investment in a new conveyor system is projected to improve throughput and increasing revenue by $14,000 per year for five years The conveyor will have an estimated market value of $4,000 at the end of five years. Using an MARR = 12% per year, what is the FW? $-19,329.40 $13,635.70 $16,998.90 none of the above W ?
Swiss franc 1-year forward rate $1.17 !! Swiss franc spot rate now $1.09 %3D Also assume that a U.S. exporter denominates its Swiss exports in Swiss francs and expects to receive SF500,000 in 1 year. Using the information above, what will be the approximate value of these exports in 1 year in U.S. dollars given that the firm executes a forward hedge? O$545,000 O$438,596 $585,000 O $570,000
A $45,000 investment in a new conveyor system is projected to improve throughput and increasing revenue by $14,000 per year for five years The conveyor will have an estimated market value of $4,000 at the end of five years. Using an MARR = 12% per year, what is the FW? $-19,329.40 $13,635.70 $16,998.90 none of the above K ?
A project has an initial cost of $150,000. The annual operating cost is $8000 for the first 10 years and $5000 thereafter. There is a recurring $15000 maintenance cost each 15 years. The equation that represents the capitalized cost of this project at i=10% is: CW(10%) =150,000+8,000(P/A, 10 %, 10)+(5000/0.1) (P/F, 10%, 11 ) + (15000 (A/F, 10%, 15))/0.1 CW(10%) - 150,000+8,000(P/A, 10 %, 10) +(5000/0.1) (P/F, 10%, 10 ) + ( 15000(A/F, 10%, 15))/0.1 O CW(10%) =150,000+8,000(P/A, 10 %, 10) + (5000 / 0.1) ( P/F, 10%, 11) +15000(A/F, 10%, 15) O CW(10%) =150,000+8,000(P/A, 10 %, 10) +(5000/0.1) (P/F, 10% , 9) +(15000(A/F, 10%, 15))/0.1