Compare the following 3 alternatives using the incremental benefit/cost ratio method. Determine which is the most...

Compare the following 3 alternatives using the incremental benefit/cost ratio method. Determine which is the most efficient and which is the most profitable. i=5% per year compounded yearly.

Alter.	DOT Construction cost	Annual Maintenance	Annual Benefits	Life (yrs)
A	$250,000	$5,000	$320,000	9
B	$450,000	$7,000	$370,000	15
C	$700,000	$10,000	$380,000	25

Expert Solution

Ally Wells answered 11 months ago

Compare the following 2 alternatives using the incremental rate of return method. Determine which is the...

Compare the following 2 alternatives using the incremental rate of return method. Determine which is the most efficient and which is the most profitable. MARR=8% per year compounded yearly. (Note: For full credit, I want you to compute the actual IRR values) Alter. Construction cost Annual Benefits Salvage Life (yrs) A $1,250,000 $300,000 $12,500 12 B $750,000 $270,000 $10,000 7

Consider the following three alternatives. Using incremental IRR analysis, determine which of these projects is the...

Consider the following three alternatives. Using incremental IRR analysis, determine which of these projects is the most desirable. Your MARR is 11%. Each of these projects (A&B) will last for eight years. (2 points) Do nothing A B Capital investment $0 $100 $130 Annual revenues $0 $150 $130.78 Annual costs $0 $123.62 $92

The following two investment alternatives are being evaluated using the B/C ratio method. The alternatives have...

The following two investment alternatives are being evaluated using the B/C ratio method. The alternatives have a 5-year service life and the MARR is 18% per year. Alternative A Alternative B Capital investment $10,900 $16,000 Annual revenues 4,000 7,500 Annual costs 250 900 Market value at EOY 5 5,000 9,200 Click the icon to view the interest and annuity table for discrete compounding when i equals=18%per year. Calculate the modified B/C ratio of Alternative A A. 1.32 B.1.35 C.1.26 D.0.90...

Five alternatives are being evaluated by the incremental rate of return method . Incremental Initial Overall...

Five alternatives are being evaluated by the incremental rate of return method . Incremental Initial Overall ROR Rate of Return Alternative Investment , S versus DN . % A B C D A -25.000 9.6 - 27.3 9.4 35.3 25.0 B 15.1 0 38.5 24.4 C - 40,000 13.4 - 46.5 27.3 D -60,000 25.4 6.8 E -75,000 20.2 - 35.000 If the projects above are independent , the one or ones to select at an MARR of 18 %...

Using the following 8 weeks of demand data to determine the best forecasting method. Compare 3...

Using the following 8 weeks of demand data to determine the best forecasting method. Compare 3 period simple moving average, 3 period weighted moving average and exponential smoothing. Week Sales 1 133 2 137 3 145 4 146 5 150 6 124 7 135 8 130 a) What is the MAD using the 3 period simple moving average (SMA) method b) What is the forecast for Week 9 using the 3 period simple moving average forecasting method? c) What is...

Using the incremental B/C method for comparing mutually exclusive alternatives always results in the same economically...

Using the incremental B/C method for comparing mutually exclusive alternatives always results in the same economically preferred alternatives as using the PW method. True/False When selecting projects based on the payback period method, a project with a shorter payback period is generally preferred. True/False One of the shortcomings of using the discounted payback period to select alternatives is that a)it ignores all the cash flows beyond the payback period b)it gives more weight to the cash flows beyond the payback...

brief explanation Solve this problem using the incremental Benefit - Cost ration with, expected life of...

brief explanation Solve this problem using the incremental Benefit - Cost ration with, expected life of 10 years and rate of return of 10% Alternative A Initial cost $50,000 Annual maintenance cost $4,000 Estimated annual benefit $10,000 Alternative B Initial cost $30,000 Annual maintenance cost $3,000 Estimated annual benefit $9,000 a. Select A with B/C =1.14 b. Select B with B/C = 1.14 c. Reject A with B/C = 1.14 d. Select B with B/C = 0.14

3. The odds ratio will most closely approximate the risk ratio from which of the following...

3. The odds ratio will most closely approximate the risk ratio from which of the following hypothetical cohort studies that have the stated risks in the exposed and unexposed groups? a. 1% risk of disease in the unexposed, 2% risk in the exposed b. 5% risk of disease in the unexposed, 10% risk in the exposed c. 10% risk of disease in the unexposed, 20% risk in the exposed d. 20% risk of disease in the unexposed, 40% risk in...

For the alternatives shown below, determine the incremental rate of return for cash flows for Q...

For the alternatives shown below, determine the incremental rate of return for cash flows for Q – P. Alternative P Alternative Q First cost, $ -50,000 -85,000 Annual operating cost, $ per year -8,600 -2,000 Annual revenue, $ per year 22,000 45,000 Salvage value, $ 3,000 8,000 Life, years 2 3

a) Define and compare the following types of cost: i. Sunk cost versus incremental cost ii....

a) Define and compare the following types of cost: i. Sunk cost versus incremental cost ii. Fixed cost versus variable cost iii. Incremental cost versus marginal cost iv. Opportunity cost versus out-of-pocket cost b) Point out which costs in the preceding question are considered “relevant” and which are considered “irrelevant” to a business decision. Explain why.

Question