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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
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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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.
Transcribed Image Text: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.
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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.

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