One of Suzanne€™s project engineers e-mailed her the screen-shot (below) of his spreadsheet analysis of the annual costs and savings for two equivalent systems considered for installation as a major upgrade of the fire and safety systems that reduce the possibility of human injury on the company€™s prime assembly line. He included the following statement in the e-mail: €œSince the company€™s MARR is 20% per year, the extra investment in FirstSafe (FS) is not justified with a breakeven incremental ROR of 16.86%. However, with an exception to reduce the required return to 16%, or slightly above this, for this case only, FirstSafe is economically acceptable over FireWall (FW). Besides, I like the features on FirstSafe much better than those of the other, less expensive FW system. Can I go ahead and order the FirstSafe system?€ From all that you have learned in these last two chapters, would you recommend that Suzanne accept this analysis and respond €œYes€ to the request to purchase FirstSafe? If not satisfied, what additional information would you suggest that Suzanne request of her engineer?

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G. н Incremental cash flow, (FS-FW), $1000 -9,000 Year ROR, % PW, $1000 i (%) vs. PW ($1000) 8,713 7,521 6,449 5% 2,000 2,000 2,000 2,000 -1,000 2,000 2,060 2,122 2,185 6% 11.000 7% 9,000 8% 5,483 Breakeven at 16.86% 6. 4,611 9% 7,000 10% 3,821 5.000 8. 11% 3,105 2,453 1,859 1,316 3.000 12% 13K 14% 10 1,000 -1,000 12 10 -1,500 15% 819 2,319 13 11 16% 363 3,000 5% 6% 7% 8x 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 14 12 2,388 2,460 2,534 17% -56 15 16 17 13 18% -442 14 19% -799 -1,128 15 2,610 20% 18 16.86%