Question

In: Accounting

There are three mutually exclusive alternatives being considered.  One of the three must be selected, so this...

There are three mutually exclusive alternatives being considered.  One of the three must be selected, so this is a set of three cost alternatives.  MARR is 15% and the life of each project is 12 years.  These projects are:

Project I

Capital Cost: $130,000

Revenue/Savings: 22,000

Expense/Cost: $12,000

Salvage: $25,000

Project II

Capital Cost: $100,000

Revenue/Savings: $10,000

Expense/Cost: $15,000

Salvage: $20,000

Project III

Capital Cost: $160,000

Revenue/Savings: $10,000

Expense/Cost: $20,000

Salvage: $40,000

please solve asap, thank you!

Solutions

Expert Solution

Answer:


Related Solutions

Three (3) mutually exclusive alternatives are being considered for the production equipment at a toilet tissue...
Three (3) mutually exclusive alternatives are being considered for the production equipment at a toilet tissue paper factory. The estimated cash flows for each alternative are given here. (All cash flows are in thousands.). Use the EUAW (Equivalent Uniform Annual Worth) method to determine which equipment alternative, if any should be selected? The firm’s MARR is 18%. Cash flow diagrams must be included. A B C Capital investment 2000 4200 7000 Annual revenues 3200 6000 8000 Annual costs 2100 4000...
Three mutually exclusive design alternatives are being considered. The estimated cash flows for each alternative are...
Three mutually exclusive design alternatives are being considered. The estimated cash flows for each alternative are given below. The MARR is 12​% per year. At the end of the useful​ life, the investment will be sold. A​ decision-maker can select one of these alternatives or decide to select none of them. Make a recommendation using the PW method. X Y Z Investment cost ​$275,000 ​$140,000 ​$370,000 Annual revenue ​$85,840 ​$53,207 ​$93,911 Annual cost ​$23,183 ​$14,370 ​$20,543 Useful life 15 years...
Three mutually exclusive investment alternatives are being considered. The estimated cash flows for each alternative are...
Three mutually exclusive investment alternatives are being considered. The estimated cash flows for each alternative are given below. The study period is 30 years and the​ firm's MARR is 17% per year. Assume repeatability and reinvestment of positive cash balances at 17​% per year. a. What is the simple payback period for Alternative​ 1? b. What is the annual worth of Alternative​ 2? c. What is the IRR of the incremental cash flows of Alternative 2 compared to Alternative​ 1?...
Three mutually exclusive investment alternatives are being considered. The estimated cash flows for each alternative are...
Three mutually exclusive investment alternatives are being considered. The estimated cash flows for each alternative are given below. The study period is 30 years and the​ firm's MARR is 10​% per year. Assume repeatability and reinvestment of positive cash balances at 10​% per year. a. What is the simple payback period for Alternative​ 1? b. What is the annual worth of Alternative​ 2? c. What is the IRR of the incremental cash flows of Alternative 2 compared to Alternative​ 1?...
Two mutually exclusive alternatives are being considered for the environmental protection equipment at a petroleum refinery....
Two mutually exclusive alternatives are being considered for the environmental protection equipment at a petroleum refinery. One of these alternatives must be selected. a. Which environmental protection equipment alternative should be​ selected? The​ firm's MARR is ​20% per year. Assume the equipment will be needed indefinitely. Assume repeatability is appropriate for this comparison. b. Assume the study period is shortened to five years. The market value of Alternative B after five years is estimated to be ​$16000. Which alternative would...
Two mutually exclusive design alternatives are being considered. The estimated cash flows for each alternative are...
Two mutually exclusive design alternatives are being considered. The estimated cash flows for each alternative are given below. The MARR is 10% per year. A decision maker must select one of these alternatives. A B Investment cost $50,000 $30,000 Annual Revenue 15,000 10,000 Salvage value 5,000 3,000 Useful life (yrs.) 5 5 For all parts below, do not convert from another form of equivalent worth; e.g., AW→FW. 1. Compute the AW for Alt A. Based on this measure, should the...
Two mutually exclusive alternatives are bring considered: A and B. Both alternatives cost $1,200 at the...
Two mutually exclusive alternatives are bring considered: A and B. Both alternatives cost $1,200 at the present. However, the pattern of revenue from them is different. Alternative A has the potential to bring more revenues later in the project life. The expected revenues of alternative A are: $350, $500, and $850 by the ends of years one to three, respectively. Alternative B promises more immediate cash inflow which is expected to diminish with time: $750, $300, and $100 by the...
Two mutually exclusive alternatives are bring considered: A and B. Both alternatives cost $1,200 at the...
Two mutually exclusive alternatives are bring considered: A and B. Both alternatives cost $1,200 at the present. However, the pattern of revenue from them is different. Alternative A has the potential to bring more revenues later in the project life. The expected revenues of alternative A are: $350, $500, and $850 by the ends of years one to three, respectively. Alternative B promises more immediate cash inflow which is expected to diminish with time: $750, $300, and $100 by the...
Three mutually exclusive design alternatives are beimg considered. The estimated cah flows for each alternative are...
Three mutually exclusive design alternatives are beimg considered. The estimated cah flows for each alternative are given below. The MARR is 20% per year. At the conclusion of the useful life, the investment will be sold. A decision-maker can select one of these alternatives or decide to select none of them. Make a recommendation using the PW method. Which alternative would you select?
Three mutually exclusive design alternatives are beimg considered. The estimated cah flows for each alternative are...
Three mutually exclusive design alternatives are beimg considered. The estimated cah flows for each alternative are given below. The MARR is 20% per year. At the conclusion of the useful life, the investment will be sold. A decision-maker can select one of these alternatives or decide to select none of them. Make a recommendation using the PW method. Which alternative would you select?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT