Problem 2 – Using NPV benefit-cost ratio and incremental analysis, a 5 year useful life, and a 15% MARR, determine which one of the following alternatives should be selected. Why? A В D E Cost UAB $200 $ 68 $100 $ 32 $125 $ 42 $150 $ 52 $225 $ 68
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- 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-nothingAny help would be appreciated! Given the data for three different alternatives in the table below, determine the best alternative using the incremental rate of return (∆RoR) analysis. MARR =9%. A B C First cost $15,000 $25,000 $20,000 O &M Cost/ year 1,600 400 900 Benefit/year 8,000 13,000 9,000 Salvage value 3,000 6,000 4,600 Life in years 4 4 4 1. The better alternative between the first increment is ________________. A. Alt. A or Alt. B B. Alt. A C. Alt.C D. Alt. B 2. The better alternative between the second increment is ___________________. A. Alt. B or Alt. C B. Alt. B C. Alt. C D. Alt. AWould 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 40000Two hazardous environment facilities are being evaluated, with the projected life of each facility being ten years. The company uses a minimum attractive rate of return (MARR) of 15%. Using incremental net present value, which alternative should be selected? B $300,000 $25,000 $92,000 -$5,000 A $615,000 $10,000 $158,000 $65,000 First Cost O&M Cost Annual Benefit Salvage ValueGiven the data for three different alternatives in the table below, determine the best alternative using the incremental rate of return (∆RoR) analysis. MARR =9%. A B C First cost $15,000 $25,000 $20,000 O &M Cost/ year 1,600 400 900 Benefit/year 8,000 13,000 9,000 Salvage value 3,000 6,000 4,600 Life in years 4 4 4 The better alternative between the second increment (B – C) is:. Group of answer choices Alt. B Alt. C Alt. B or Alt. C Alt. A
- 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.Question 4 Which increment should be examined first in incremental rate of return analysis, if MARR = 9.0%? Do-nothing A First cost Annual benefit Life ROR A-B O A-C O B-C OB-A 0 0 10 yrs $5,500 895 10.0% B C $3,000 $7,000 531 1,164 12.0% 10.5% D $3,000 408 6.0%Given the data for three different alternatives in the table below, determine the best alternative using the incremental rate of return (∆RoR) analysis. MARR =9%. A B C First Cost $15,000 $25,000 $20,000 O &M Cost/ year 1,600 400 900 Benefit/year 8,000 13,000 9,000 Salvage value 3,000 6,000 4,600 Life in years 4 4 4 Group of answer choices Cannot determine Alterative A Alterative B Alterative C
- 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 10Given cash flows for two alternatives as shown in table below, choose the most attractive alternative if MARR = 8%. Year 0 1 2 3 through ∞ Alt. A -$42K $3.6K $3.6K $3.6K Alt. B -$54K $4.7K $4.7K $4.7K Group of answer choices Alt. A Alt. B Select neither Select eitherGiven the data for two different alternatives in the table below, determine the best alternative using the incremental rate of return (AROR) analysis. MARR =9%. A B First cost $15,000 $20,000 O&M Cost/year 1,600 900 Benefit/year 8,000 9,000 Salvage value 3,000 4,600 Life in years 4 4