Two mutually exclusive alternatives are being considered for a site equipment at a petroleum refinery. One of these alternatives must be selected. The firm's MARR is 9% per year. The estimated cash flows for each alternative are below. If the repeatability assumption is made, which alternative is better and what is the AW of the selected alternative? Please round your answer to the nearest integer. Equipment A: • Investment Cost: $77,000 • Annual Revenue: $21,000 • Market Value: $11.000

A project is being planned that has an initial investment at time 0, annual revenuesand expenses, and a salvage value at the end of the project lifespan (20 years). The financialvalues are summarized below:Initial investment amount at time 0 $150,000Estimated annual revenue $34,500 per yearEstimated annual expenses $8,700 per yearEstimated salvage value at end of lifespan $10,000Minimum attractive rate of return (MARR) 15%a. Calculate the capital recovery amount CR(i%).b. Using the annual worth (AW) method, determine whether purchasing the equipmentis economically justified.c. Repeat part (a) using the internal rate of return (IRR) method based on annual worth(AW).d. Using the present worth (PW) method, determine the break-even time period afterwhich purchase of the equipment generates a profit. (Find N when PW = 0) year period.

Answer the problems on the basis of the above graph and the most likely estimates given as follows: If the profit (R−E) is decreased by 5%, this projectis not profitable. (a) True (b) False.

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An engineering firm has identified five ways to cut costs in its main office. Only one of the options can be implemented, however, since each involves significant training time for staff engineers. Data are provided in the table. Each option has a lifetime of seven years, and the firm sets a MARR at 15%. Option A B C D E Capital cost ($ million) 2.713 0.375 1.650 0.088 0.950 Annual cost ($ million/yr 0.093 0.275 0.132 0.147 0.228 Annual benefit ($ million/yr) 0.890 0.288 0.841 0.312 0.505 a) Solve by present worth analysis. b) Solve by annual cash flow analysis. c) Solve by incremental benefit-cost ratio analysis. d) Solve by an incremental rate of return analysis using the full detailed procedure

With the given information please calculate NPV, NPW, EUAW, and IRR for each alternative. The interest rate is 15%

12% per year. For the cash flows shown, use an annual worth comparison and an interest rate of First cost, $ Annual cost$, per year Overhaul cost every 5 years,$ Salvage value, $ Life, years X Y -100,000 -250,000 -40,000 -30,000 0 2,000 30,000 10,000 5 10 Z -500,000 -10,000 5,000 ∞ a) Determine the alternative that is economically best. b) Determine the first cost required for each of the two alternatives not selected in part a) so that

You are considering an open-pit mining operation. The cash flow pattern issomewhat unusual since you must invest in some mining equipment, conductoperations for two years, and then restore the sites to their original condition.You estimate the net cash flows to be as follows: N              Cash flow  0              -$1,600,0001                1,500,0002                1,500,0003                 -700,000 What is the approximate rate of return of this investment?(a) 25%(b)38%(c) 42%(d)62%

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