5. (a) Use rate of return analysis to decide which one will you select if your...

 

Transcribed Image Text:

5. (a) Use rate of return analysis to decide which one will you select if your MARR is 14% per year? (b) Graph interest rate vs. present value for both option 1 and 2. (c) Discuss how your selection between option 1 and 2 will change when MARR is changed and at which interest rate the two options are the same economically. The following two altenatives are mutually exclusive. Alternative Initial Life, Annual Benefit Salvage Value Cost years Option 1 Option 2 $42,000 $45,000 $10,000 $11,500 $4,000 $4,200 4. 5. (a) Use rate of return analysis to decide which one will you select if your MARR is 14% per year? (b) Graph interest rate vs. present value for both option 1 and 2. (c) Discuss how your selection between option 1 and 2 will change when MARR is changed and at which interest rate the two options are the same economically. The following two altenatives are mutually exclusive. Alternative Initial Life, Annual Benefit Salvage Value Cost years Option 1 Option 2 $42,000 $45,000 $10,000 $11,500 $4,000 $4,200 4.

Answer rating: 100% (QA)

a IRR is the discount rate at which NPV is 0Let IRR be r then CC11rC21r... View the full answer