Question: Consider three alternatives: *At the end of its useful life, an identical alternative (with the same cost, benefits, and useful life) may be installed. All

Consider three alternatives:

A First cost $150 $50 $110 39.6 Uniform annual benefit Useful life, in years* Computed rate of retum 28.8 39.6 6 2 10% 1

*At the end of its useful life, an identical alternative (with the same cost, benefits, and useful life) may be installed.

All the alternatives have no salvage value. If the MARR is 12% which alternatives should be selected?

(a) Solve the problem by future worth analysis.

(b) Solve the problem by benefit-cost ratio analysis. 9-49

(d) If the answers in parts (a), (b), and (c) differ, explain why this is the case.

A First cost $150 $50 $110 39.6 Uniform annual benefit Useful life, in years* Computed rate of retum 28.8 39.6 6 2 10% 15% 16.4%

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A B C Cost 50 150 110 Annual Benefit 288 396 396 Useful Life 2 yr 6 yr 4 yr a Solve by Future Worth analysis In future worth analysis there must be a common future time for all calculations In this ca... View full answer

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