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6.38 A WiMAX wireless network integrated with a satellite network can provide connectivity to any location within 10 km of the base station. The number of sectors per base station can be varied to increase the bandwidth. An independent cable operator is considering the three bandwidth alter- natives shown below (monetary values in $1000 units). Assume a life of 20 years and a MARR of 25% per year to determine which alternative is best using an incremental ROR analysis. Operating Cost, Annual Income, Bandwidth, First Mbps Cost, $$per year per year 2000 1000 500 40,000 46,000 61,000 +4000 +5000 +8000
For example.. I want it looks like that

cf 150000 -1000 -1000 -1000 -1000 4000 cf -200000 1500 1500 1500 1500 5500 0 2 4 5 npv pv ($535.27) ($1,159.39) ($150,535.27) ($201,159.39)
0 0
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Answer #1

Step 1. Arrange the different bandwidths in the increasing order of investments

Step 2. Select the bandwidth 44 as the base alternative and find the difference between bandwidth 55 and 44

Step 3. If the IRR of the difference is higher than the MARR of 25 percent, then the drop the base alternative 44 and select bandwidth 55 as the base

Step 4. Find the IRR of the difference of cashflow of alternative 88 and 55. As the IRR of the difference is lesser than the MARR of 25 percent, select the base alternative 44 and drop the bandwidth 88

n

Bandwidth,44

Bandwidth,55

Bandwidth,88

Cashflow diff, 55-44

Cashflow diff, 88-55

0

-40000

-46000

-61000

-6000

-15000

1

2000

4000

7500

2000

3500

2

2000

4000

7500

2000

3500

3

2000

4000

7500

2000

3500

4

2000

4000

7500

2000

3500

5

2000

4000

7500

2000

3500

6

2000

4000

7500

2000

3500

7

2000

4000

7500

2000

3500

8

2000

4000

7500

2000

3500

9

2000

4000

7500

2000

3500

10

2000

4000

7500

2000

3500

11

2000

4000

7500

2000

3500

12

2000

4000

7500

2000

3500

13

2000

4000

7500

2000

3500

14

2000

4000

7500

2000

3500

15

2000

4000

7500

2000

3500

16

2000

4000

7500

2000

3500

17

2000

4000

7500

2000

3500

18

2000

4000

7500

2000

3500

19

2000

4000

7500

2000

3500

20

2000

4000

7500

2000

3500

IRR

33%

23%

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