Two mutually exclusive design alternatives are shown below. The MARR is 12% per year. Use the repeatability assumption. What is the PW of Alternative A and B? Which alternative should be recommended?

Your Question : Please introduction and correct and incorrect option explain!

Harry is trying to evaluate a two year project using NPV. There is uncertainty as to the level of sales (in units) in each of the two years:  Year 1 Sales units                    Probability                   Year 2 Sales units                    Probability  10,000                                       0.3                                           8,000                           0.2                                                                                                 10,000              0.8 15,000                                        0.7                                           20,000              0.6                                                                                                 10,000              0.4 Required:  (a) On what expected level of sales in Year 1 and 2 should Harry base his NPV calculation? (b) Imagine that the project outlay is £230,000 and each unit sold has a contribution of £10.  If Harry’s cost of capital is 10%, what is the project’s…

For the following two alternatives, if the MARR is 10% per year (a)which one has a shorter payback period (b) which one do you select if you use the PW analysis. (c) is your selection different in (a) and (b)? Why? (d) use Spreadsheet to solve a and b. Alternative A: initial cost = $300,000 Revenue = $60,000 Alternative B: initial costs = $300,000 Revenue starts from n=1 at $10,000 and increases by $15,000 per year The expected life is 10 years for each alternative.