Question: 1. Three mutually exclusive alternatives are being evaluated, and their cost and revenues are listed in Table 6-1. (1) If MARR is 20% per year
1. Three mutually exclusive alternatives are being evaluated, and their cost and revenues are listed in Table 6-1.
(1) If MARR is 20% per year and the analysis period is 10 years, use the PW method to determine which alternatives are economically accepted and which one should be selected?
(2) If the total capital investment budget available is $50,000, which alternative should be selected?
Table 6-1
| | Alternative 1 | Alternative 2 | Alternative 3 |
| Capital investment | $300,000 | $450,000 | $600,000 |
| Annual revenue | $200,000 | $100,000 | $200,000 |
| Annual cost | $50,000 | $50,000 | $100,000 |
| Market value at end | $50,000 | $50,000 | $100,000 |
| Useful life (years) | 10 | 10 | 10 |
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To solve this problem we need to perform an economic analysis using the Present Worth PW method and also evaluate the impact of a budget constraint He... View full answer
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