Five revenue projects are under consideration by General Dynamics for improving material flow through an assembly line. The initial cost (in

$1000 units) and life of each project are estimated.

Income estimates are not known at this point.

Project A B C D E Initial cost, $ 700 900 2300 300 1600 Life, years 5 5 5 5 5 An engineer determined the incremental ROR ( i*) values. From these results, determine which project, if any, should be undertaken, provided the company’s MARR is

(a) 13.5% per year, and (b)
16% per year. If other calculations must be made in order to make a decision, state which ones are necessary Comparison i*, % Comparison i*, %
C to DN 24 B to A 53 C to B 25 B to DN 23 D to DN 15 A to DN 13 E to C 59 E to B 16 E to D 4 B to D 26 E to A 0 D to C 25 E to DN 6 A to D 12