Canvas A 2. (30 points) Four projects are being evaluated, and their cash flows are listed below. If the MARR is 15% per year, use AW method to determine which projects are economically acceptable, and which should be selected, 11 MIT IV Capital Investment - 100.000 - 152.000 184.000 -200.000 Annual Revenues less Expenses 15.200 31.900 35,900 45,000 Salvage Value 10,000 0 15,000 35,000 Useful life 12 00 8 3. [15 points) One alternative is being considered: First Cost 9.200 Uniform Annual Benefit 1.850 Useful Life 8 a) Calculate the conventional B/C ratio at a discount rate of 7% per year. b) Determine the minimum first cost necessary to make the project economically justified. 4. [20 points) The county commission is considering three alternatives to spread gravel over a rough dirt road leading to a public astronomical observatory run by the local university. The first cost of each alternative and the benefits for each of the following 3 years have been estimated and are shown in the table below. The decision has been made to proceed with one of the three alternatives (i.e., doing nothing is not an alternative). Assuming an MARR of 7%, use incremental benefit-cost analysis to determine the preferred alternative. End of Year Alt. A Alt. B Alt. C 0 12,000 18.000 15,000 1 5,000 8,000 7,500 12 5,000 8,000 7.500 3 5.000 8,000 7,500 5 115 points Two alternatives with useful lives of two years have been proposed