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b) compare alternatives B and C using the benefit to cost ratio (B/C) me this. which alternatives would you choose belated on this method?

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Related questions

Which of the following statements identifies a difference between optimization in levels and optimization in differences?

A. Optimization in differences compares the net benefit of different alternatives, whereas optimization in levels compares only the cost involved in different alternatives.

B. Optimization in differences compares only the cost involved in different alternatives, whereas optimization in levels compares the net benefit of different alternatives.

C. In most cases, optimization in levels is faster and easier than optimization in differences.

D. In many cases, optimization in differences is faster and easier than optimization in levels.

A company has to choose between two alternatives. Alternative 1 has a cost of $250,000, an annual benefit of $2,500, and a life of 8 years. Alternative 2 has a $100,000 cost, an annual benefit of $1,750, and a life of 4 years. What is the IRR of the difference between the two alternatives, i.e. Alt 1 - Alt 2.

Ā 

Ā 

  1. Given two alternatives:

    Data

    A

    B

    First Cost

    $4,000

    $6,000

    Annual Cost

    $1,000

    $500

    Annual Benefit

    $2,000

    $2,200

    Life, Years

    4

    10

    Salvage Value

    $3,000

    $1,000

    Assuming hat alternatives are replaced at the end of their useful life, determine the better alternative using annual cash flow analysis at an interest rate of 10%.

    A.

    Alternative A, $786
    B.

    Alternative B, $786
    C.

    Alternative A, $384
    D.

    Alternative B, $384

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