Three alternative proposals are suggested for a project with the following cash flows. Choose the best alternative based on IRR. MARR = 15%. The life of alternatives is 10 years. Alternatives 1 11 ||| InitialInvestment $350,000 $150,000 $220,000 Net Income/ year $35,000 $20,0000 $22,000 Salvage Value $100,000 $15,000 $50,000

Three alternative proposals are suggested for a project with the following cash flows. Choose the best alternative based on IRR. MARR = 15%. The life of alternatives is 10 years. Alternatives 1 11 ||| InitialInvestment $350,000 $150,000 $220,000 Net Income/ year $35,000 $20,0000 $22,000 Salvage Value $100,000 $15,000 $50,000

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Three mutually exclusive design alternatives are being considered. The estimated cash flows for each alternative are given next. The MARR is 20% per year. At the end of the useful life, the investment will be sold A B Capital $28,000 $55,000 $40,000 Investment Annual 15,000 13,000 22,000 Expenses Annual 23,000 28,000 32,000 Revenues MV at EOY 10 10,000 10 years 6,000 8,000 Useful life 10 years 10 years Evaluate all alternatives using PW & IRR method and determine which alternative is preferable.
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Consider the following cash flow profile and assume MARR is 10%/yr. Solve, a. Determine the ERR for this project. b. Is this project economically attractive?
Consider the following two mutually exclusive projects being considered by an agency. The agency's MARR is 6% per year and the projects have a service life of 5 years. Initial cost Annual revenues Present Worth (PW) Answer the following questions. Project 1 $14,200 $3,832 $1,942 Project 2 $21,700 $5,637 $2,045 a. Based on the PW, the project that is more economical is Project 2 (Enter the project number). b. Calculate the IRR of each alternative (use the trial-and-error method) The IRR of Project 1 is % (Round to the nearest one decimal place) The IRR of Project 2 is% (Round to the nearest one decimal place) c. Perform the incremental IRR analysis to determine the project that is more economical: Incremental IRR =% (Round to the nearest one decimal place); Therefore, based on the incremental IRR, Project 2 is more economical.
Please solve it in a paper so i can understand the concept too instead of excel.
Walt Wallace Construction is investigating the purchase of a new dump truck with a 10 year useful life. Annual interest is 9%.The cash flows for two models are: Model Purchase price Annual Operating Cost Annual Income Salvage Value A $50,000 $2,000 $9,000 $10,000 B $80,000 $1,000 $12,000 $30,000 Using the present worth analysis, which truck should be purchased and why? (Show your PW numbers for each option and explain the better choice.)
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Three alternative proposals are suggested for a project with the following cash flows. Choose the best alternative based on IRR. MARR = 15%. The life of alternatives is 10 years. Alternatives I II IIIInitialInvestment $350,000 $150,000 $220,000Net Income/ year $35,000 $20,0000 $22,000Salvage Value $100,000 $15,000 $50,000
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A concrete pavement on a street would cost P 2M and would lasts for 5 years. Minor maintenance cost is P 50,000 per year. At the end of each 5 years, P 100,000 would be spent to remove the old surface before P 1M is spent again to lay a new surface. Find the capitalized cost of the pavement at 6%. Select one: a. P 6.28 M b. P6.09M c. P 6.74 M d. P 6.82 M