1. Using benefit–cost ratio analysis, determine which one of the three mutually exclusive alternatives should be selected. Each alternative has a 6-year useful life. Assume a 20% Minimum Acceptable Rate of Return (MARR). **Table: Alternative Analyses**| | A | B | C ||------------|------|------|------|| **First cost** | $560 | $340 | $120 || **Uniform annual benefit** | 140 | 100 | 40 || **Salvage value** | 40 | 0 | 0 |- The table compares three investment alternatives (A, B, and C) based on their first cost, uniform annual benefit, and salvage value.- Each investment alternative has a 6-year useful life and is evaluated with a 20% MARR to identify the best option.

1. Using benefit-cost ratio analysis, determine which one of the three mutually exclusive alternatives should be selected. Each alternative has a 6-year useful life. Assume a 20% MARR. First cost Uniform annual benefit Salvage value A $560 $340 140 100 40 0 B C $120 40 0

1. Using benefit-cost ratio analysis, determine which one of the three mutually exclusive alternatives should be selected. Each alternative has a 6-year useful life. Assume a 20% MARR. First cost Uniform annual benefit Salvage value A $560 $340 140 100 40 0 B C $120 40 0

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: help please answer in text form with proper workings and explanation for each and every part and…

A: NPV Calculation FormulaNPV=𝐶𝑡/(1+𝑟)^t where:• 𝐶𝑡= Cash flow at time t• r = Discount rate (12%…

Q: in case of having three mutually exclusive alternatives, which should be selected The useful life is…

A: Introduction: cash flow outwardly addresses pay and costs throughout some time stretches. The chart…

Q: Three mutually exclusive alternatives are being considered. i) Initial investment cost Annual net…

A: Present worth refers to the discounted value of the future cash flows .

Q: 8-37 which option should be chosen. A firm must decide which of three alternatives to adopt to…

A: Defending a challenger The investment that has the lowest investment is chosen as the defender,…

Q: Four mutually exclusive investment alternatives have a 5-year useful life and no salvage value. The…

A: Net present value a measure that calculates the difference between the present value of cash…

Q: A construction company must replace a piece of heavy earth-moving equipment. Cat and Volvo are the…

Q: Solve the following problem and show complete solution 1. Data for two alternatives are given in the…

A: Given: Interest rate=11% Alternative A: Cost=P 9500, Annual Benefit=2800, Salvage value=1000…

Q: What is the present worth of alternative A? Use an interest rate of 10%. (Round your answer to the…

Q: Xanadu Mining is considering three mutually exclusive alternatives, as shown in the table below.…

A: The above answer can be explained as under - The present worth is calculated using the excel formula…

Q: 13. Using benefit-cost ratio analysis, 5 year useful life, and a 15% MARR, determine which of the…

A: cost-benefit ratio analysis is computed for the determination of the economic acceptability of the…

Q: Given the financial data for three alternatives Initial cost EUAB Life ROR A $600 82 10 years 6.1% O…

A: MARR stands for "Minimum Acceptable Rate of Return." In economics, it represents the lowest rate of…

Q: Determine which alternative is the most viable by incremental B / C (values in thousands),…

A: Benefit-to-Cost (B/C) analysis involves comparing the present value of benefits to the present value…

Q: Given the following data, use Annual Worth analysis to find the best alternative, A, B, or C. Use an…

A: Present value of annual benefit= 6000 PVAF( 15%, 2) = 6000(1.6257)= 9754.25Present value of salvage…

Q: Consider four mutually exclusive alternatives: A B C D Cost $65 $55 $25 $80 Uniform annual benefit…

A: Payback period is a financial metric used in economics to determine the length of time it takes to…

Q: 2.) Three mutually exclusive alternatives are being considered. Initial investment cost Annual net…

A: Present worth refers to the discounted value of the future cash flows.

Q: Each of the three alternatives shown has a 5-year useful life. MARR is 10%, a) Using FW,…

A: For alternative AFirst cost=$650Annual benefit=180For alternative BFirst cost=$500Annual…

Q: Compute for the Annual Worth of MEA1 and explain. Compute using the Annual Worth formula and WITHOUT…

A: r= 12%

Q: PARAMETERS МEA 1 Investment Cost 1,500,000 Annual Service Benefit 200,000 Annual Insurance Benefit…

A: i'm assuming 10% as interest rate

Q: 9-33 Using benefit-cost ratio analysis, determine which one of the three mutually exclusive…

A: Cost-benefit analysis is a method for contrasting the expenses and advantages of an intervention,…

Q: 2. A local government is considering two alternatives for automobile parking facilities. Specific…

A: Net Present Worth (NPW), also known as Net Present Value (NPV), is a financial metric used in…

Q: Example 3: Applying present worth when useful lives are equal Interest: 8%; N = 6 years Alternatives…

A: By applying the present value when the best alternative will be chosen by comparing the present…

Q: Consider the following four mutually exclusive alternatives, each with a 10-yr life. Y Z $1,500 $750…

A: Payback period is used to determine the length of time required to recover the initial investment in…

Q: A contractor must choose between buying or renting a crane for the duration of a 5 year construction…

A: Given:- MARR=8% or 0.08 Crane cost=$520,000 Maintenance cost=$210,000 Crane renting=$310000 Please…

Q: 3. Carp, Inc. wants to evaluate two methods of packaging their products. Use an interest rate of 15%…

A: Particular A B First Cost 700000 1700000 O&M Cost 18000 29000 + Cost Gradient 900 750…

Q: Consider the following options and information provided. Which alternatives, if any, should not be…

A: When we use the internal rate of return method to compare the alternative, then the alternative…

Q: The following estimates (in $1000 units) have been developed for a security system upgrade at…

A: The formula for conventional B/C ratio, Here, Bis present/future/annual worth of benefits, D is…

Q: First Cost $80,000 $120,000 Annual property 3,000 5,000 Annual income 11,000 16,000 Life of…

A: The economic benefit or loss is the difference between the income received from the sale of the…

Q: Consider the following alternatives: Initial cost $10,000 $15,000 $20,000 Uniform annual 1000 1762…

A: Given information 3 projects A,B and C Project A Initial cost=$10000 Annual benefit=$1000 Life=…

Q: 4. The relevant information for each alternative is shown below. Use an interest rate of 12 % per…

A: We know, PW = MV*(1+i)^-n i=12% t= 2 years

Q: Margaret has a project with a $28 000 first cost that returns $5000 per year over its 10-year life.…

A: Given information: MARR = 15% N=10 years Return of $5000 per year from its cost of $28000 Salvage…

Q: 2. General Motors Company is considering three mutually exclusive alternatives for implementing a…

A: Given Data: Study Period =10 years Annual interest rate = 10% A B C Capital Cost $…

Q: The following cash flows has an interest rate of 9% per year, compounded annually. Use Annual worth…

A: Annual Worth is the constant discounted values of all the future cash flows . To derive the annual…

Q: 4. For MARR of 6% and each alternative having a life of 20 years with no salvage value and cost…

A: We will find the present worth of all three alternatives and then the alternative with the greatest…

Q: 1) Consider the follows Projects: If MARR= 17%. Recommend the best choice based upon ROR analysis: C…

A: Given Cash flow Cash flow Year Project A Project B Project C Project D 0 -500 -1000 -800…

Q: 4. Consider four mutually exclusive alternatives: Initial Cost, $ A $770.00 Uniform annual benefit,…

A: The choice between various available alternatives is known as decision making and in economics, the…

Q: 5. Find best alternative using Benefit-Cost analysis method Useful Life MARR Project 50years 10%…

A: The formula for the benefit-cost ratio is shown below,

Q: 5. Quick Logistics is considering two possible locations of a new warehouse to serve the central…

A: A financial statistic called present worth, commonly referred to as present value, is used to…

Q: help please answer in text form with proper workings and explanation for each and every part and…

A: First things first: figure out how much Alternative A would be worth at various interest rates. Here…

Q: Consider three alternatives A, B, and "do-nothing." (a) Graph the NPW for the alternatives and…

A: Net Present Worth (NPW) is the value difference between the present worth of cash inflows and the…

Q: 7. ratio analysis. Interest rate is 4%. For the data below, select the best alternative using the…

A: A B C Initial Cost -230000 -200000 -220000 Annual Benefit 54000 39000 41000 Salvage value…

Q: Acme Molding is examining 5 alternatives for a piece of material handling equipment. Each has an…

Q: Year 0 123456 2 5 E - $90 20 20 20 20 20 20 F - $110 35 35 35 35 0 0 G - $100 0 10 20 30 40 50 H -…

A: Payback period refers to the length of time required for an investment to generate sufficient cash…

Q: Consider the three mutually exclusive alternatives below. A B C Initial Cost $350…

A: The objective of the question is to determine which of the three alternatives (A, B, or C) should be…

Q: Question 4 Determine which option, if any, should be chosen based on net present worth using a 8%…

A: Calculation: a. Net present value of Alternative A = -First cost + Present value of annual…

Q: 9. Two alternatives with identical benefits are being considered: AB Initial cost $500 $800 Uniform…

A: Payback analysis helps in calculating the payback period of any investment which occurs in a firm ,…

Q: Basrah university is scheduling to enlarge its research operation. It has recognised three different…

A: 1. The Net present worth of the first option: Net Present Worth = Present value of annual revenues -…

Question

1. Using benefit–cost ratio analysis, determine which one of the three mutually exclusive alternatives should be selected. Each alternative has a 6-year useful life. Assume a 20% Minimum Acceptable Rate of Return (MARR).

**Table: Alternative Analyses**

| | A | B | C |
|------------|------|------|------|
| **First cost** | $560 | $340 | $120 |
| **Uniform annual benefit** | 140 | 100 | 40 |
| **Salvage value** | 40 | 0 | 0 |

- The table compares three investment alternatives (A, B, and C) based on their first cost, uniform annual benefit, and salvage value.
- Each investment alternative has a 6-year useful life and is evaluated with a 20% MARR to identify the best option.

Expert Solution

Step 1

Cost-benefit analysis is a method for contrasting the expenses and advantages of an intervention, where both are communicated in monetary units. Both Cost-benefit analysis and cost-effectiveness analysis (CEA) incorporate health outcomes.

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Equivalent Uniform Annual Benefit and Cost

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

Two machines are being considered for purchase. If the MARR (for this problem, also the minimum required interest rate) is 10%, which machine should be bought?
Period Project Cash Flows n A B C D 0 - $6,000 -$2,500 $4,800 -$4,100 1 $5,800 -$4,400 - $6,000 $1,000 2 $12,400 $7,000 $2,000 $5,000 3 $8,200 $3,000 $4,000 $6,000 Determine payback period, NPS, NFW of the projetcs A,B,C and D with MARR of 15%
A junior PM determines the present worth of a project to be $56,417. He misplaced the full set of calculations but knows that the project lasts 5 years with a first cost of $180,000, and a set of equal cash flows at the end of each year. MARR used was 10%. What is the IRR for this project?
Q#2 Graph the EUAC or EUAB of the following two mutually exclusive alternatives. Use interest rate from 0% to 100% Initial cost Annual Cost HP Dell 6800 16,999 1500 1800 Annual Benefits 4000 5500 Salvage Value Useful Life in years 1000 35000 4 8
Can someone help me to solve this problem using the present worth analysis? Using neatly written hand calculations. PLEASE AND THANK YOU!!!!
Please answer these two question with proper solution and write it on a paper Thank you.
M12
Hh.207.
Plz solve in 1/2 hour it's urgently need