Two mutually exclusive design alternatives are being considered for purchase. Doing nothing is also an option. The estimated cash flows for each alternative are given below. The MARR is 7% per year. Using the PW method, which alternative, if either, should be recommended? Click the icon to view the alternatives description. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 7% per year. The PW for the Alternative 1 is $ The PW for the Alternative 2 is $ should be selected. (Round to the nearest dollar.) (Round to the nearest dollar.)

Two mutually exclusive design alternatives are being considered for purchase. Doing nothing is also an option. The estimated cash flows for each alternative are given below. The MARR is 7% per year. Using the PW method, which alternative, if either, should be recommended? Click the icon to view the alternatives description. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 7% per year. The PW for the Alternative 1 is $ The PW for the Alternative 2 is $ should be selected. (Round to the nearest dollar.) (Round to the nearest dollar.)

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: ! Required information You just deposited $9,500 in an investment account and will deposit $5000…

A: Today deposited amount =$9500After 4 years from now, the deposit =$5000We have to calculate the…

Q: A permanent endowment at a major university is established to award scholarships to engineering…

A: Given,Scholarship starts from the 11th year,Scholarship amount (Per year) = 19000×100 =1900000Final…

Q: :For an interest rate of 4% per quarter, the effective annual rate is closest to 16.00% 17.75% 8.00%…

A: Economics can be defined as the allocation of scarce resources in order to satisfy the consumer…

Q: You are planning to make 18 monthly withdrawals beginning at the end of the sixth month. You plan to…

A: We are required to determine the present value of the monthly withdrawals. The first withdrawal will…

Q: Problem #1: For the cash flows shown 1 2 3 7 8 Year in the diagram, determine the future worth in…

A: Given: The rate of interest is = 10% To Find: The future worth in year 8:

Q: 4.35 For the cash flows shown, determine the equivalent uniform annual worth in years 1 through 5 at…

A: Annual worth refers to the equivalent value of cash flows occurring over a one-year period. It…

Q: What is the equivalent annual cost in years 1 through 11.00 of a contract that has a first cost of…

A: The current worth of future money is known as present value. It is based on the time preference of…

Q: Midize Flower Company provides flowers and other nursery products for decorative purposes in medium…

A: The internal rate of return is 20%Explanation: Excel formula:

Q: A new permanent endowment at the University of Alabama will award scholarships to engineering…

A: In the above question, Lump sum donation = $20 million Time = 5 and half years No of students= 100…

Q: Option i C/R Option ii C/R One Time Costs One Time Costs Land-$10 million (Year 1) C…

A: In economics and finance, present worth (PV), also known as present discounted value, is the value…

Q: None

A: To determine if Wilma is correct, we'll need to calculate the Annual Worth (AW) for both the current…

Q: Lignin is a basic component of almost any plant that grows, so it is one of the most abundant…

A: In the given cash flow diagram the initial investment is $45 million and the investments at the end…

Q: Incorrect Question 8 When calculating the Break Even Analysis, one needs to subtract the FW of the…

A: False

Q: A fund is to be donated by wealthy man to provide scholarships to deserving students. The fund will…

A: Step 1:working:we need to find out the present value of grants.Present value of annuity factor = [1…

Q: An endowment of $1,000,000M has been setup to fund ten engineering scholarships every year in a…

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

Q: A large automobile manufacturer has developed a continuous variable transmission (CVT) that…

A: Determining CVT AffordabilityWe need to compare the fuel cost savings over eight years with the…

Q: What is the equivalent annual cost in years 1 through 8.00 of a contract that has a first cost of…

A: The current worth of future money is known as present value (PV). It is based on the time preference…

Q: Assume that 25 years ago your dad invested $240,000, plus $31,000 in years 2 through 5, and $45,000…

A: Given; Amount invested= $2,40,000 Amount invested from 2 year to 5 years= $31,000 Amount invested…

Question

100%

Capital Investment
Annual Revenues
Annual Expenses
MV at end of useful life
Useful Life
IRR
Alternative 1
$16,000
$7,000
$2,400
$1,600
4 years
9.1%
Alternative 2
$23,000
$13,000
$5,000
$600
12 years
33.7%
□

Two mutually exclusive design alternatives are being considered for purchase. Doing nothing is also an option. The estimated cash flows for each alternative are given below. The
MARR is 7% per year. Using the PW method, which alternative, if either, should be recommended?
Click the icon to view the alternatives description.
Click the icon to view the interest and annuity table for discrete compounding when the MARR is 7% per year.
The PW for the Alternative 1 is $
The PW for the Alternative 2 is $
should be selected.
(Round to the nearest dollar.)
(Round to the nearest dollar.)

Expert Solution

This question has been solved!

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

SEE SOLUTION Check out a sample Q&A here

Step 1: Define present worth:-

VIEW

Step 2: Calculate present worth of alternative 1 & 2:-

VIEW

Solution

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Renewable And Exhaustible Natural Resources

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

Solve it clearly and correctly please. I will rate.
Please provide a clear and complete solution. Answer fast for I have 30 minutes left. Thank you very much.
Problem 02.038 - Calculation of unknown base cash flow The future worth in year 10 of an arithmetic gradient cash flow series for years 1 through 10 is $600,000. If the gradient increase each year, G, is $1500, determine the cash flow in year 1 at an interest rate of 11% per year. The cash flow in year 1 is $
answer as soon as possible
Carlisle Company has been cited and must invest in equipment to reduce stack emissions or face EPA fines of $16,500 per year. An emission reduction filter will cost $75,000 and have an expected life of 5 years. Carlisle's MARR is 10%/year. Part a What is the future worth of this investment? $
help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working
Problem 03.013- Annual worth calculations What is the equivalent annual cost in years 1 through 9.00 of a contract that has a first cost of $77,000 in year 0 and annual costs of $17,000 in years 3 through 9.00? Use an interest rate of 15.00% per year. (Round the final answer to three decimal places.) The equivalent annual cost is determined to be $ I
Problem 03.015- Annual worth calculations Improvised explosive devices (IEDs) are responsible for many deaths in times of strife and war. Unmanned ground vehicles (robots) can be used to disarm the IEDs and perform other tasks as well. If the robots cost $125,000 each and the military arms unit signs a contract to purchase 4,000 of them now and another 7,500 one year from now, what is the equivalent annual cost of the contract over a 8.00-year period at 12.00% per year interest? (Round the final answer to three decimal places.) The equivalent cost of the contract is determined to be $