Two mutually exclusive design alternatives are being considered the estimated cash flow's for each alternative are given below. The MARR is 12% per year. The decision-maker can select one of these alternatives, or decide to select none of them make a recommendation based on the following methods. Two mutually exclusive design alternatives are being considered. The estimated cash flows for each alternative are given below. ThThe decision-maker can select one of these alternatives or decide to select none of them. Make a recommendation based on the faDesign YDesign Za. Based on PW method, Design z is more economical.b. The modified B/C ratio of Design Y isThe modified B/C ration of Design Z isInvestment costAnnual revenueAnnual costUseful lifeSalvage valueNet PW(Round to two decimal places)(Round to two decimal places)c. The incremental B/C ratio is (Round to two decimal places)Therefore, based on the B/C ratio method, Design z is more economical$140,000$47,537$9,80915 years$14,700$119,646d. The discounted payback period of Design Y isThe discounted payback period of Design Z isyears (Round to one decimal place)years (Round to one decimal place)Therefore, based on the payback period method, Design y would be preferred.$275,000$91,161$27,85515 years$33,000$162,198

Present worth refers to the discounted value of the future cash flows . More the present of worth of…

Two mutually exclusive design alternatives are being considered. The estimated cash flows for each alternative are give The decision-maker can select one of these alternatives or decide to select none of them. Make a recommendation bas Design Y Design Z Investment cost Annual revenue Annual cost Useful life Salvage value $140,000 $47,537 $9,809 15 years $14,700 $275,000 $91,161 $27,855 15 years $33,000

Two mutually exclusive design alternatives are being considered. The estimated cash flows for each alternative are give The decision-maker can select one of these alternatives or decide to select none of them. Make a recommendation bas Design Y Design Z Investment cost Annual revenue Annual cost Useful life Salvage value $140,000 $47,537 $9,809 15 years $14,700 $275,000 $91,161 $27,855 15 years $33,000

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 10E

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