Homework Answers
1st we need to calculate the profit for each project using 10% of MARR.
Profit for project = Initial cash outflow + Cash inflow in year 1/(1 + MARR) + cash inflow in year 2/(1 + MARR)^2 + cash inflow in year 3/(1 + MARR)^3
Profit for model A = -6000 + 3500/(1.1) + 3500/(1.1)^2 + 3500/(1.1)^3
= -6000 + 3181.81 + 2892.56 + 2629.60
= 2703.97
Number of hours worked in 3 years = 2000 * 3
= 6000 hours
Unit profit generated by model A = $2703.97/6000
= $.45
Thus the correct answer is 2nd option i.e., $.45/hour
In case of simple payback period MARR has no impact thus the incorrect answer will be option 4.
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