The manager of Liquid Sleeve, Inc., a company that makes a sealing solution for machine shaft surfaces
Question:
The manager of Liquid Sleeve, Inc., a company that makes a sealing solution for machine shaft surfaces that have been compromised by abrasion, high pressures, or inadequate lubrication, is considering adding metal-based nanoparticles of either type Al or Fe to its solution to increase the product's performance at high temperatures. The costs associated with each are shown below. The company's MARR is 20% per year. Do the following using a PW-based rate of return analysis and a spreadsheet:
(a) Determine which nanoparticle type the company should select using the ∆i* value.
(b) On the same graph, plot the PW versus different i values for each alternative. Indicate the breakeven i* value and the MARR value on the plot.
(c) Use the plot of PW versus ∆i values to select the better alternative with MARR = 20% per year. Is the answer the same as in part(a)?
MARRMinimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other...
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