Solve this problem in Excel. The following two alternatives are mutually exclusive. (a) Which one will you select if your MARR is 15% per year? Use rate of return analysis. (b) Graph interest rate vs. present value for both option 1 and 2. ( c) Discuss how your selection between option 1 and 2 will change when MARR is changed and at which interest rate the two options are the same economically. Alternative Initial Cost Annual Benefit Life, years Ordinary (O) $38,000 $9,400 5 Above average (AA) $35,000 $9,000 6

Solve this problem in Excel. The following two alternatives are mutually exclusive. (a) Which one will you select if your MARR is 15% per year? Use rate of return analysis. (b) Graph interest rate vs. present value for both option 1 and 2. ( c) Discuss how your selection between option 1 and 2 will change when MARR is changed and at which interest rate the two options are the same economically. Alternative Initial Cost Annual Benefit Life, years Ordinary (O) $38,000 $9,400 5 Above average (AA) $35,000 $9,000 6

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

See similar textbooks

Similar questions

TRUE OR FALSE For any economy study based on our discussions, it is always necessary to determine the profit to evaluate thebetter/best alternative. If simple interest is evaluated, then the interest obtained will always be directly proportional to the number of yearsassuming that a constant interest rate is used throughout these years.
Solve by incremental cashflow then PW = 0. To get the value of i by interpolation. Problem 3: Two plans for a hydroelectric project in Peru have been proposed. The opportunity cost, in soles, of resources is 10 percent. Data on the two alternatives are: System First cost ($/,000,000,000) 300 160 Economic life (years) 40 20 Salvage value ($/,000,000,000) 15 12 Annual benefits (S/.000,000,000) 25 22 Annual costs ($/,000,000,000) 3 1 Using the internal rate of return method, which of the two systems should be chosen or should either be selected?
Question 4 Which increment should be examined first in incremental rate of return analysis, if MARR = 9.0%? Do-nothing A First cost Annual benefit Life ROR A-B O A-C O B-C OB-A 0 0 10 yrs $5,500 895 10.0% B C $3,000 $7,000 531 1,164 12.0% 10.5% D $3,000 408 6.0%
Question 1Last month you lent a work colleague $5000 to cover some overdue bills. He agreed to pay you in1 month with interest at 2% for the month, thus owing you $5100. Today, when the repayment isdue, he asked you to extend the loan for another month and he would pay you the $5100 nextmonth. In the meantime, you have had the offer to invest as much as you wish in an oil-well venturethat is expected to pay 25% per year and a hot new IT stock that is estimated to return 30% thefirst year. If you let your colleague have another month, what is the opportunity cost of yourdecision? (Note: Express your answer in dollar and percentage amounts.)
The cash flows for three mutually exclusive alternatives are given in table below. MARR = 4%. ALB Alt. C 27,000 24,000 7,600 6,500 13% 11% Initial cost Annual benefits ROR Life in years Alt. A $15,000 $4,500 15% 5 Reference: Case Study 8 The best alternative for a MARR of 2.0% using the incremental rate of return analysis is A. Alt. C B. Alt. B C. Alt. A OD.Do-nothing
Suppose you are offered two options: (i) receive Taka 30,000 at the end of 5 years or (ii) receive Taka P today and another Taka P 2 year later. When you invest the P Taka in ecommerce it pays around 8% profit yearly. What value of P would be same as promise of Taka 30,000 after 5 years? Assume there is no risk in this future payment.
What is the best alternative using incremental Analysis? Use MARR = 15% A B C Capital Investment $ 2,000 7,000 4,200 Annual Revenues 3,200 8,000 6,000 Аппиal Costs 2, 100 5, 100 4,000 Market Value at the end of useful life 100 600 420 Useful Life (in years) 10 10 10 The correct ranking of Alternative is Blank 1 Select Alternative Blank 2 Note: Do not put comma, unit of measure and limit your answer to two decimal places. Ex: A-B-C
may 25 1 options are 5,270 ,51.30,51.30/5, 0 thousan thingamabobs, dollar,thingamabobs,thousand dollar. please add those where it fits. i wasnt able to share more than 2 scrrenshots
2. If the rate of return on the additional cash flows between the two alternatives is less than the MARR rate, which alternative should be chosen? A. The alternative to choose is one that requires a lower initial investment B. The alternative chosen is the alternative with the smallest annual cost c. The alternative chosen is the alternative with the highest annual cost D. The alternative chosen is an alternative with an annual fee equal to the initial fee Please solve based the option max 20 minutes ASAP
a. The PW of the Gas Heating Option is b. The PW of the Geothermal Heating Option is c. The lower cost alternative is the geothermal heating option
John invests 10000 of his savings into opening up a new coffee roasting company over the course of a year the new coffee roasting company earns him a 6% return on his investment if John had not invested his money in the coffee roasting company he could have earned a 5% return by investing the 10000 in the stock market instead thus he did 1% better in the coffee roasting company than he could have done on his alternative investment which kind of cost does this alternative investment represent opportunity cost average total cost fixed cost variable cost
ENGINEERING ECONOMICSIt costs P500,000 at the end of each year to maintain a section of Kennon Road in Baguio City. If money is worth10%, how much would it pay to spend immediately to reduce the annual cost to P100,000?a. List the given variablesb. Formula & Complete solution