Consider the following mutually exclusive alternatives: Table 1: Mutually Exclusive Alternatives B D E Capital Investment $5,000 $5,250 $5,750 $6,200 $7,500 Annual Revenue $2,800 $2.400 $2,900 $2,450 $4,000 Annual Expense $2,000 $1,350 $1,150 $1,200 $1,800 Salvage Value $8,000 $500 $500 $1,500 $2,500 Project life 7 7 5 8 8 (years) IRR 10.13% 11.86% 11.16% 12.05% 13.45% PW (7.3%) $4,152.01 $655.38 $1,719.61 $2,031.80 $6,908.28 AW (7.3%) $778.50 $122.88 $422.77 $344.23 $1,170.40 FW (7.3%) $6,799.18 $1,073.22 $2,445.85 $3,570.08 $12,138.58 6) From the table 1 above, if the MARR = 11% what alternative(s) is cancelled when performing an incremental analysis? a) Project A b) Project B and C c) Project A, B and C d) Project D and E e) Project E Justify: 7) From the table 1 above, the worst project is: a) Project A b) Project B c) Project C d) Project D e) Project E Justify: 8) From the table 1 above, If the MARR= 12 %, select the correct choice a) We cannot compare projects based on the PW. b) Since FW of project E is the highest, it is the best alternative. c) Since the life of projects are different, we can only compare projects based on the AW. d) We cannot compare projects based on IRR when they have different life. e) If company decreases MARR to 8%, number of available alternatives decreases. Justify: 9) When 2 projects are evaluated using FW and both values are negative, select the best answer: a) Neither project should be rejected b) Select the project with the least negative value c) Select the project with the most negative value d) We need to consider IRR e) Rank them in order from cheapest to expensive using the initial costs Justify: 10) To find the most profitable project among a set of potential candidates: a) Evaluate them using AW if they have different lives, or PW or FW if they have equal lives. Then select the one with the most negative value. b) Evaluate them using PW or FW if they have different lives, or AW if they have equal lives. Then select the one with the most negative value. c) Evaluate them using AW if they have different lives, or PW or FW if they have equal lives. Then select the one with the most positive value. d) Compare MARR and choose the project with the highest MARR e) Compare IRR and choose the project with the highest IRR Justify: Consider the following mutually exclusive alternatives: Table 1: Mutually Exclusive Alternatives B D E Capital Investment $5,000 $5,250 $5,750 $6,200 $7,500 Annual Revenue $2,800 $2.400 $2,900 $2,450 $4,000 Annual Expense $2,000 $1,350 $1,150 $1,200 $1,800 Salvage Value $8,000 $500 $500 $1,500 $2,500 Project life 7 7 5 8 8 (years) IRR 10.13% 11.86% 11.16% 12.05% 13.45% PW (7.3%) $4,152.01 $655.38 $1,719.61 $2,031.80 $6,908.28 AW (7.3%) $778.50 $122.88 $422.77 $344.23 $1,170.40 FW (7.3%) $6,799.18 $1,073.22 $2,445.85 $3,570.08 $12,138.58 6) From the table 1 above, if the MARR = 11% what alternative(s) is cancelled when performing an incremental analysis? a) Project A b) Project B and C c) Project A, B and C d) Project D and E e) Project E Justify: 7) From the table 1 above, the worst project is: a) Project A b) Project B c) Project C d) Project D e) Project E Justify: 8) From the table 1 above, If the MARR= 12 %, select the correct choice a) We cannot compare projects based on the PW. b) Since FW of project E is the highest, it is the best alternative. c) Since the life of projects are different, we can only compare projects based on the AW. d) We cannot compare projects based on IRR when they have different life. e) If company decreases MARR to 8%, number of available alternatives decreases. Justify: 9) When 2 projects are evaluated using FW and both values are negative, select the best answer: a) Neither project should be rejected b) Select the project with the least negative value c) Select the project with the most negative value d) We need to consider IRR e) Rank them in order from cheapest to expensive using the initial costs Justify: 10) To find the most profitable project among a set of potential candidates: a) Evaluate them using AW if they have different lives, or PW or FW if they have equal lives. Then select the one with the most negative value. b) Evaluate them using PW or FW if they have different lives, or AW if they have equal lives. Then select the one with the most negative value. c) Evaluate them using AW if they have different lives, or PW or FW if they have equal lives. Then select the one with the most positive value. d) Compare MARR and choose the project with the highest MARR e) Compare IRR and choose the project with the highest IRR Justify