At Miami Products, four project proposals (three with mutually exclusive alternatives) are being considered. All the alternatives have a 10-year useful life and no salvage value.

(a) Use rate of return methods to determine which set of projects should be undertaken if the MARR is 10%.

(b) Use rate of return methods to determine which set of projects should, be undertaken if the capital budget is limited to $100,000.

(c) For a budget of $100,000, what interest rate should be used in rationing capital by present worth methods? (Limit your answer to a value for which there is a compound interest table available in the appendix)

(d) Using the interest rate determined in part (c), rank order the eight different investment opportunities by means of the present worth method.

(e) For a budget of $100,000 and the ranking in part (d), which of the investment opportunities should be selected?

Uniform Computed Annual Project Proposal (thousands) (thousands) Project 1 Alt. A Alt. B Cost Benefits Rate of Return $4.61 9.96 $25 50 10 13% 15 20 Alt. C 2.39 Project 2 Alt. A Alt. B 20 4.14 16 6.71 35 14 Project 3 Alt. A 5.56 18 25 10 2.15 17 Alt. B Project 4 10 1.70 11