Six mutually exclusive investments have been identified for evaluation by means of the benefit-cost ratio method. Assume

Question:

Six mutually exclusive investments have been identified for evaluation by means of the benefit-cost ratio method. Assume a MARR of 10%, an equal project life of 25 years for all alternatives, and the data in Table P16-25.

(a) Use annual worth and the B/C ratio to identify the better alternative.

(b) If this were a set of independent alternatives, how would you conduct a comparison?

Mr. O' Gratias, a top manager in his company, has been asked to consider the following mutually exclusive investment alternatives.

Mutually Exclusive Alternatives 1 2 3 4 5 6 15.5 13.7 16.8 10.2 17.0 23.3 Annualized net cosis to sponsor ($M) 20.0 16.0

MARR
Minimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other...