ENGINEERING ECONOMIC A local authority is considering three alternatives access plans. The capital budget willonly allow accepting one of the three alternatives. Financial data for the three plans aregiven in Table 2. The interest is 11%, compounded annually.a)i) Evaluate the three plans based on the present worth method of comparison.ii) Propose your opinion to accept the best plan.Table 2PlanPlan 1Plan 2Plan 3First cost (RM)3,000,000 3,450,000 | 2,500,000Estimated annual Revenue (RM)550,000560,000450,000Estimated salvage value (RM)40,00045,00030,000Useful life111310

In economics, present value refers to the current value of a future stream of cash flow. The net…

A local authority is considering three alternatives access plans. The capital budget will only allow accepting one of the three alternatives. Financial data for the three plans are given in Table 2. The interest is 11%, compounded annually. i) Evaluate the three plans based on the present worth method of comparison. ii) Propose your opinion to accept the best plan. Table 2 Plan Plan 1 Plan 2 Plan 3 First cost (RM) 3,000,000 3,450,000 2,500,000 Estimated annual Revenue (RM) 550,000 560,000 450,000 Estimated salvage value (RM) 40,000 45,000 30,000 Useful life 11 13 10

A local authority is considering three alternatives access plans. The capital budget will only allow accepting one of the three alternatives. Financial data for the three plans are given in Table 2. The interest is 11%, compounded annually. i) Evaluate the three plans based on the present worth method of comparison. ii) Propose your opinion to accept the best plan. Table 2 Plan Plan 1 Plan 2 Plan 3 First cost (RM) 3,000,000 3,450,000 2,500,000 Estimated annual Revenue (RM) 550,000 560,000 450,000 Estimated salvage value (RM) 40,000 45,000 30,000 Useful life 11 13 10

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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2. If the rate of return on the additional cash flows between the two alternatives is less than the MARR rate, which alternative should be chosen? A. The alternative to choose is one that requires a lower initial investment B. The alternative chosen is the alternative with the smallest annual cost c. The alternative chosen is the alternative with the highest annual cost D. The alternative chosen is an alternative with an annual fee equal to the initial fee Please solve based the option max 20 minutes ASAP
The cash flows for three mutually exclusive alternatives are given in table below. MARR = 4%. ALB Alt. C 27,000 24,000 7,600 6,500 13% 11% Initial cost Annual benefits ROR Life in years Alt. A $15,000 $4,500 15% 5 Reference: Case Study 8 The best alternative for a MARR of 2.0% using the incremental rate of return analysis is A. Alt. C B. Alt. B C. Alt. A OD.Do-nothing
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Solve by incremental cashflow then PW = 0. To get the value of i by interpolation. Problem 3: Two plans for a hydroelectric project in Peru have been proposed. The opportunity cost, in soles, of resources is 10 percent. Data on the two alternatives are: System First cost ($/,000,000,000) 300 160 Economic life (years) 40 20 Salvage value ($/,000,000,000) 15 12 Annual benefits (S/.000,000,000) 25 22 Annual costs ($/,000,000,000) 3 1 Using the internal rate of return method, which of the two systems should be chosen or should either be selected?
Would love some help on how to approach this - thanks! The cash flows for three different alternatives are given in table below. MARR =10%. Alt. A Alt. B Alt. C Initial cost $5,000 9,000 7,500 Annual benefits $1,457 2,518 2,133 RoR 14% 13% 12.4% Life in years 5 1. ΔRoR for the first increment (Alt. C-Alt. A) is ___________________. A.10.12% B. 9.38% C. 11.85% D. 11.00% 2. ΔRoR for the second increment is ___________________. A. 10.12% B. 9.38% C. 8.94% D. 9.87% 3. The best alternative for a MARR of 10% using the incremental rate of return analysis is ____________. A. Alt. C B. Alt. A C. Alt. B D. Do nothing
:[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
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7) Margaret has a project with a $28 000 first cost that returns $5000 per year over its 10-year life. It has a salvage value of $3000 at the end of 10 years. If the MARR is 15 percent, what is the present worth of this project?
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