Question: 1. The cash flows (in KD) for two mutually exclusive alternatives in Kuwait are as in the table below: [4] n Y X X-Y 0

 1. The cash flows (in KD) for two mutually exclusive alternatives

1. The cash flows (in KD) for two mutually exclusive alternatives in Kuwait are as in the table below: [4] n Y X X-Y 0 -3,000 -12,000 -9,000 1 1,350 4,200 2,850 2 1,800 6,225 4,425 3 1,500 6,330 4,830 ROR (%) 23 18 15 a. Which project would you select at MARR = 20%? Why? [2] b. Which of the two alternatives is not financially viable? Why? [2] 2. The equivalent annual worth of an increasing arithmetic gradient is $55,400. If the cash flow in year 1 is $17,000 and the gradient amount is $11,000, what is the value of n at an interest rate of 8% per year? [4]

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