HW-Chap-8 - Engineering Economy ENGR 300 Chapter 8 RORX =...

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Engineering Economy ENGR 300 Chapter 8 8-2 Compute Rates of Return Alternative X: $100 = $31.5 (P/A, i%, 4) (P/A, i%, 4) = $100/$31.5 = 3.17 RORX = 9.9% Alternative Y: $50 = $16.5 (P/A, i%, 4) (P/A, i%, 4) = $50/$16.5 = 3.03 RORY = 12.1% Incremental Analysis Year X – Y= $50 A1-4 =+$15 $50 = $15 (P/A, i%, 4)Δ RORX-Y = 7.7% (a) At MARR = 6%, the X − Y increment is desirable. Select X. (b) At MARR = 9%, the X − Y increment is undesirable. Select Y. (c) At MARR = 10%, reject Alt. X as RORX < MARR. Select Y. (d) At MARR = 14%, both alternatives have ROR < MARR. Do nothing. 8-11 Looking at Alternatives B & C it is apparent that B dominates C. Since at the same cost B produces a greater annual benefit, it will always be preferred over C. C may, therefore, be immediately discarded. Retain A. Conclusion: Select Alternative A. 8-24 Put the four alternatives in order of increasing cost: Do nothing < U-Sort-M < Ship-R < Sort-Of U-Sort-M: Do Nothing First Cost $180,000 Annual Benefit $68,000
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HW-Chap-8 - Engineering Economy ENGR 300 Chapter 8 RORX =...

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