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- Which alternative should be selected using the incremental rate of return analysis, if MARR =11.0%? Do- nothing A B C D First Cost 0 $10,000 $4000 $10,000 $7000 Annual benefit 0 1,806 828 1,880 1,067 Life 10 Years ROR 12.5% 16.0% 13.5% 8.5% a. B, because its ROR is the highest b. Something other than C, because C costs the most initially c. C, because the C-B increment has a ROR of 11.78% and the A-B increment has a ROR of 10.5% d. C because C has the highest annual benefitTwo alternatives are being considered: First cost Uniform annual benefit Useful life, in years If the minimum attractive rate of return is 7%, which alternative should be selected? Solution: 2. Terms n= 8 1. Use the increment analysis, we should use B-A ο ΔΑΞ A 3. The Increment CFD has 3 basic patterns: ο ΔΡ= ο ΔΕΞ 4. AROR= 8.32 % 5. Choose B 5400 9800 1750 1850 4 8 B occurred at end of year 4Which alternative should be selected using incremental rate of return analysis, if MARR = 12.0%? First cost Annual benefit Life ROR Do-nothing 0 10 yrs A B $6,500 $3,500 1,246 765 с D $7,500 $5,000 1,523 779 14.0% 17.5% 15.5% 9.0% B, because its ROR is the highest something other than C, because C costs the most initially C because C has the highest annual benefit C, because the C-B increment has a ROR of 13.70% and the A-B increment has a ROR of 9.66%
- Consider the following two investment alternatives. Determine the range of investment costs for Alternative B (i.e., min. value < XConsider the following two investment alternatives. Determine the range of investment costs for Alternative B (i.e., min. value < X < max. value) that will convince an investor to select Alternative B. MARR = 10% per year, and other relevant data are shown in the following table. State clearly any assumptions that are necessary to support your answer.Compare alternatives A and B with the equivalent worth method of your choice if the MARR is 15% per year. Which one would you recommend? State all assumptions. Suppose the study period has been coterminated at 10 years. Use the imputed market value technique and determine which alternative is the most economical.Consider the following four alternatives. Three are do-something and one is Do -Nothing. Alternative A B D Cost $O $50 $30 $40 Net annual benefit Useful life (years) Which is the preferred alternative? If 10% interest rate is selected. Use PW analysis. $O $14 $5 $7 5 10 10Given the financial data in the table below for two mutually exclusive alternatives, determine the value "X" for the two alternatives to be equally attractive. Use an interest rate of 10% per year. Initial cost $2,500 $4,000 Annual benefit 500 600 Life You do not need to interpolate, just answer the closest n that surrounds your number. For example between year so and so.Compare the following two 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 return (AROR). Alt. Construction cost $ Benefits $/yr Salvage $ Service Life (yrs) A 410,000 55,000 20,000 11 B 250,000 35,000 10,000 11Use the ERR method to evaluate the economic worth of the diagram shown below. The value of the external reinvestment rate, ∈, is 8% per year. The MARR = 10% per year.Find the internal rate of return for the following investment (yes I want the actual rate). Is it a good idea if MARR=10%? Year -160,400 1 75,000 2 -32,000 3 55,000 4 32,500 5 69,500Five alternatives are being evaluated by the incremental rate of return method. Incremental Rate of Return, % Initial Overall ROR Alternative Investment, $ versus DN, % A B D - 25,000 - 35,000 - 40,000 -60,000 -75,000 9.6 27.3 9.4 35.3 25.0 В 15.1 38.5 24.4 13.4 46.5 27.3 - 25.4 6.8 20.2 (SO2PI1) If the projects above are mutually exclusive and the MARR is 5% per year, the best alternative is Select one: O a. E O b. A O c.D d. B ABCDESEE MORE QUESTIONS