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ENG 106
Winter ‘12
Open Notes
Quiz #4
Name:
Two mutually exclusive (ME) alternatives have the following cash flows:
Alternatives
Year
A
B
0
$2,800 $2,000
1
+1,100
+800
2
+1,100
+800
3
+1,100
+800
We want to choose one of the alternatives.
a) Set up the equation to solve for the rate of return on the increment of investment, but do not solve
.
Set up increment as an investment, A  B
Alternatives
Increment
Year
A
B
A  B
0
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Unformatted text preview: $2,800 $2,000$800 1 +1,100 +800 +300 2 +1,100 +800 +300 3 +1,100 +800 +300 PW AB = 0 = 800 + 300 X + 300 X 2 + 300 X 3 where X = (1 + i)1 or ܹܲ ି ൌ 0 ൌ െ800 300 ቂ ሺଵାሻ య ିଵ ሺଵାሻ య ቃ ൌ ሺ300 െ 800 ݅ሻ ሺ1 ݅ሻ ଷ െ 300 b) Given a MARR, what would be the criteria to accept one of the alternatives? If i* > MARR accept A If i* < MARR keep B...
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This note was uploaded on 04/03/2012 for the course ENGIN 106 taught by Professor Fizali during the Spring '12 term at Laney College.
 Spring '12
 fizali

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