Consider the three mutually exclusive alternatives below. A B C Initial Cost $350 $125 $200 Uniform Annual Benefit $90 $27.7 $80 Assume each alternative has a 5-year useful life and no salvage value. Based on a 5% interest rate and the benefit-cost ratio, which alternative should be selected? Group of answer choices A B No answer text provided. They are all equal

Consider the three mutually exclusive alternatives below. A B C Initial Cost $350 $125 $200 Uniform Annual Benefit $90 $27.7 $80 Assume each alternative has a 5-year useful life and no salvage value. Based on a 5% interest rate and the benefit-cost ratio, which alternative should be selected? Group of answer choices A B No answer text provided. They are all equal

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

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Alternatives B and C are replaced at the end of their useful lives with identical replacements. Find the best alternative using MARR = 10%. Data Initial Cost Uniform Annual Benefit Useful Life a) Benefit to Cost ratio analysis b) Payback Period Analysis Alt. A $6,00 $150 20 Alt. B $900 $300 5 Alt. C $1,800 $450 10
Qutestion 3 Solve this problem using the incremental Benefit - Cost ration with, expected life of 10 years and rate of return of 10% Alternative A Initial cost $50,000 Annual maintenance cost $4,000 Estimated annual benefit $15,000 Alternative B Initial cost $30,000 Annual maintenance cost $3,000 Estimated annual benefit $9,000 a. Select B with B/C=1.14 b. Select B with B/C=1.41 c. Select A with B/C=1.14 d. Reject A with B/C=1.14
The five mutually exclusive alternatives shown below are under consideration for improving visitor safety and access to additional areas of a national park. If all alternatives are considered to last indefinitely, determine which should be selected on the basis of a rate of return analysis using an interest rate of 10%. A B C D E_ First cost, $ millions -20 -40 -35 -90 -70 Annual M&O cost, $ millions -2 -1.5 -1.9 -1.1 -1.3 Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
A city is planning to renovate their current facility with hi-tech computerized systems. Four plans are proposed by the engineers. Each plan will save $950,000 annually but their cost is different. The benefits will last for 30 years. Based on a benefit-cost analysis what should the agency do, if i = 10%? Initial Cost Annual O & M A $7,250,000 $90,000 B D E F C $6,000,000 $6,500,000 $7,500,000 $8,000,000 $5,500,000 $110,000 $140,000 $80,000 $150,000 $60,000 FOCUS
Decision making in the engineering economy is concerned with choosing the best 1. Alternative with the longest life 2. Alternative with the least cost 3. Alternative with highest revenue 4. An alternative that is the most cost-effective O 1
A city is planning to renovate their current facility with hi-tech computerized systems. Four plans are proposed by the engineers. Each plan will save $900,000 annually but their cost is different. The benefits will last for 25 years. Based on a benefit-cost analysis what should the agency do, if į = 10%? Initial Cost Annual O & M A $7,000,000 $90,000 Plans B $7,500,000 $120,000 с $6,500,000 $130,000 D $8,000,000 $40,000
Each of the three mutually exclusive alternatives shown has a 5-year useful life. If the MARR is 10%, which alternative should be selected? Solve the problem by benefit-cost ratio analysis. A B Cost Uniform annual benefit $600.0 158.3 $500.0 138.7 с $200.0 58.3
Consider the four mutually exclusive alternatives. Each alternative has 10 years useful life and no salvage value. Which alternative should be selected based on the payback period. Note: You don't have to conside time value of money (i%). Cost Uniform Annual Benefit A $25 $4.8 3 $60 $16.8 C $90 $23.8 Focus D $120 $33.4
:[A] { > Incremental analysis ([ B Alternative], [B wins ]): C A company considering 2 different machines at MARR at 12% Both life spans = 10 years Initial Cost Annual Operating lost Benefits per yin ar Salvage Value \table MM If you are and of frying investment to company decide More than 2 alternatives if the additional increment is worth while, compare Alternative: A Incremental analysis (Alternative) pairs then B C A MARR Company at Considering 2 different machines at 12% Both life spans = 10 years. M/C X м/с у Initial Cost 160000 285000 Annual Operating Cost Benefits per year Salvage Value 45 000 90000 45000 105000 20000 40000
Example 3: Applying present worth when useful lives are equal Interest: 8%; N = 6 years Alternatives Atlas Tom Thumb Cost $2000 $3000 Uniform Annual End-of-Useful-Life Salvage Value Benefit $450 $600 $200 $700
In engineering economics it is often used present worth analysis to determine best alternative between options. I was wondering how do we know what type of formula to use. Sometimes it is used the formula with P/A, others A/P, as F/A and P/F and so on. How do we know which fraction to use?
Following cash flows for alternatives X and Y at an interest rate of 10% per year. Initial cost, $ AOC, $/year Annual revenue, $/year Salvage value, $ Life, years Multiple Choice In comparing the alternatives on a present worth basis, the PW of Machine X is closest to O O $23.160. $40,560 $58,950. Machine X Machine Y -146,000 -220,000 $72,432 -15,000 -10,000 80,000 75,000 10,000 25,000 3 6