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don't use Excel please do it by hand
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- Use Rate of Return Analysis to determine whether Alternative A or B should be chosen. Assume the MARR is 6% per year, compounded annually. Initial Cost Annual Benefit Salvage Value Useful Life (yrs) Alternative A 700 170 0 5 Alternative B 1189 270 0 5 Alternative B should be chosen, because the incremental rate of return of B-A is 0.75%, which is less than the MARR Alternative B should be selected because its rate of return is 4.39%, which is less than the MARR Alternative A should be selected because its rate of return is 6.84%, which is greater than the MARR Alternative A should be chosen, because the incremental rate of return of B-A is 0.75%, which is less than the MARRUsing (incremental) benefit-cost ratio analysis OR (incremental) internal rate of return, determine which of the following three mutually exclusive alternatives should be selected. Each alternative has a 6-year useful life. Assume the MARR is 6%. First Cost Uniform Annual Benefit Salvage Value $560 $140 $40 A $340 $100 0 B $125 $40 0 C1. Each aiternative has a 10-year useful life and have no salvage value. If the MARR is 8%, which alternative would you select? You must use incremental analysis (incremental internal rate of return). Please show step by step calculations. R Initial Cost 15000 22000 35000 Annual Costs 3500 3100 2750 Annual Revenues 8000 9575 11500
- 6. Compare the following three alternatives by the IRR method, given MARR of 6%/year. First find if they are feasible and then compare them with the incremental rate of retum method (AROR). Construction cost S Benefits S/yr Salvage S Alt. Service Life (yrs) 510,000 145,000 -10,000 775.000 155,000 15,000 1,075,000 165,000 20,000 6.Compare the following alternatives based on the rate of return analysis assuming that the MAAR is 15% per year. Project A Project B Initial Cost $60.000 $90.000 Annual cost of operation 15.000 8.000 Annual cost of reparation 5.000 2.000 Annual increase of the repair 1.000 1.500 Salvage value 8.000 12.000 Life, years 15 151. Prepare a differential anaysis comparing present machine (Alt. 1) to new machine (Alt. 2). Analysis should indicate total differential income over the six-year period if the new machine is purchased. 2. Which Alternative would you propose? What other factors should be considered? 3. What if you could invest the funds required to purchase the new equipment (cost less proceeds from sale of old machine) at 4% per year. Does this change your viewpoint? What does this indicate of the limitations of this method for evaluating an investment proposal?
- REQUIRED Study the information given below and calculate the following: Payback period (in years, months and days) Net Present Value Internal Rate of Return (expressed to two decimal places). (Note: Your answer must include the interpolation.) information Eva Limited is considering the purchase of a machine. The company desires a minimum required rate of return of 12%. The machine will cost R2 200 000 plus installation costs of R200 000 and is expected to have a useful life of six years. It is anticipated that the machine will have a salvage value of R100 000. The machine is expected to increase revenues by R800 000 per year but will require the employment of two new machine operators at R100 000 per year for each operator, and it will also require maintenance and repairs averaging R50 000 per year. Depreciation is estimated to be R400 000 per year.A research laboratoty purchased a water jet cutter in which their total manufacturing cost is expected to decrease due to an increased productivity as shown on the table below. a) Draw the Cash Flow Diagram b) Determine the equivalent annual cost at an interest rate of 8% per year Year 1 2 3 4 5 6 7 8 Cost, ₱ 1, 000 200 195 190 185 180 175 170 165Use the following alternatives to develop an incremental analysis choice table and answer the following questions. Alternative A Initial Cost - $15,000 Annual Revenue (Year 1-15) - $2500 Salvage Benefit (Year 15) - $2000 Alternative B Initial Cost - $25,000 Annual Revenue (Year 1-15) - $3500 Salvage Benefit (Year 15) - $5000 1. Determine the incremental rate of return IRRHigh-Low. Provide your answer as a percentage and round to the nearest hundredth. 2. Determine the internal rate of return for the higher cost alternative IRRHigh. Provide your answer as a percentage and round to the nearest hundredth. 3. Determine the internal rate of return for the lower cost alternative IRRLow. Provide your answer as a percentage and round to the nearest hundredth. Please answer all 3.
- A project is estimated to cost P120T, last 8 years & have a salvage value of P20T. The annual gross income is expected to average P50k & annual expenses is P5T. If capital is earning 10% determine if this is a desirable investment using annual cost method, what is the net cost. : a. 24,255.598 b. P24,756.951 c. 25,245.598 d. P27,535.412Determine which of the following alternatives is the most efficient and which is the most profitable using a method of your choice. Rate 5% per year. + Item Year A B Construction Cost -300 -200 1 30 20 2 45 45 3 56 40 4 65 50 Benefit 5 70 25 6 45 7 80 35 55 30ality is working on following two mutually exclusive proposals for increasing and optimizing the traffic lighting. Find the best option by using the Benefit/Cost ratio analysis given that the MARR 10%. Project-I Project-II Initial cost ($) 900,000 1,700,000 Annual operating cost ($/ per year) 120,000 60.000 Annual benefit ($ / per year) 730,000 650,000 Annual disbenefit ($ / per year) 300,000 195,000 Life (years) 10 25