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Consider the following two mutually exclusive alternatives. Each alternative has a 10-year useful life and no salvage value. If the MARR is 10%, which alternative should be selected? Answer in terms of the incremental rate of return analysis.

Cash flow A B
Initial cost $6000 $9000
Annual benefit $1000 $1500

 

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Yusra Anees
Yusra AneesLv10
28 Sep 2019

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Related questions

Consider the following two mutually exclusive alternatives. Each alternative has a 10-year useful life and no salvage value. If the interest rate is 10%, which alternative should be selected? Answer in terms of benefit-cost ratio analysis. 

Cash flow A B
Initial cost $6000 $9000
Annual benefit $1000 $1500

 

Please show work

2)

Compute the rate of return for the following cash flow.

YEAR CASH FLOW
0 -$700
1 0
2 100
3 200
4 300
5 300

3)

Three mutually exclusive projects are being considered:

A B C
First cost $1000 $2000 $3000
Uniform annual benefit $150 $150 $0
Salvage value $850 $2500 $5200
Useful life 5 years 5 years 5 years

If the MARR = 11%, which project should be selected?

4)

Financial data related to three different alternatives are provided in the table below. Assume that alternatives are replaced at the end of their useful lives. MARR = 8%. The EUAC of alternative P is?

Data P Q R
Initial Cost $5000 $1000 $2500
Uniform Annual Benefits $650 $0 $350
Salvage Value $5000 $1760 $2000
Useful Life in Years 20 5 10

Consider the following five mutually exclusive alternatives that have 10-year useful lives and no salvage value. If MARR is 9%, which alternative should be selected?

Data A B C D E

Initial Cost $4,000 $5,000 $2,000 $3,000 $6,000

Uniform Annual Benefit $797 $885 $259 $447 $1,063

A. Alt. B or Alt. C

B. Alt. D

C. Alt. E

D. Alt. A

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