Problem $3$

Chapter $8$ Incremental Analysis $(50$ Points$)$

Show your work $-$ calculations

Consider four mutually exclusive alternative investments that have

$15-$year useful lives and a salvage value of $$850.$ If the Minimum

Attractive Rate of Return $($MARR$)$ is $6\%,$ which alternative should be selected?

Initial Cost:

A$.$ $$3,000$

B$.$ $$2,000$

C$.$ $$5,000$

D$.$ $$4,000$

The net annual income $($ EUAB $),$ after paying all operating expenses is projected at:

A$.$ $$516$

B$.$ $$259$

C$.$ $$885$

D$.$ $$651$

Numerical Solution:

$\backslash$table$[[,1,$B$,$C$,$D$)],[$PW Cost,,,,$],[$EUAB$,,,,],[$Salvage$,,,,],[P{W}_{\text{s}\text{i}\text{o}\text{s}\text{e}}P{W}_{sene},,,,],[,,,,]]$

Computations: $($Use back of facing page or last page in this exam booklet, if necessary$)$

Perform Incremental Analysis to select the best alternative.

$\backslash$table$[[$Rewrranged Alternatives:,,,,$],[$PW Bencfit PW Salvage,,,,$],[$PW Cost,,,,$],[$Net Present Worth,,,,$],[$Decision$,,,,]]$

Pair wise Comparisons

$\backslash$table$[[$Delta Alternative:,,,$],[\frac{?}{{?}_{\frac{?}{?}}}$ PW Benefit,,,$],[\frac{?}{{?}_{\frac{?}{?}}}$ PW Cost,,,$],[$Decision$,,,]]$

Choice:

$3$ May $2024$