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The key question answered by incremental analysis is: a. Does the lowest cost alternative have an...
Question 3 10 pts Which alternative should be selected using incremental rate of return analysis, if...
Question 3 10 pts Which alternative should be selected using incremental rate of return analysis, if MARR = 10.5%? B C D $3,500 $9,000 $3,000 738 1,793 1467 JO Do-nothing A First costo $9,000 Annual 1,626 benefit Life 10 yrs 12.5% ROR 16.5% 15.0% 0.0% OB, because its ROR is the highest something other than C, because C costs the most initially OC because C has the highest annual benefit OC, because the C-B increment has a ROR of 14.03%...
in the incremental analysis question, how did we calculate the IRR of these two alternatives (C-A)? can you show it to...
in the incremental analysis question, how did we calculate the
IRR of these two alternatives (C-A)? can you show it to me step by
step?
Solution The next largest investment is in Alternative C, so examine the incremental investment of C over A. In the table below the IRR of C-A is shown. Alternative C- A Capital $12,000 $14,400 $2,400 investment $2,500 $3,050 $550 Net annual ncome 13.48% 15.86% IRR 12.99% 15.86% > MARR, so Alternative C "wins."
Solution The...
Question 7 (1 point) In evaluating independent projects, no incremental analysis is necessary between projects. Each...
Question 7 (1 point) In evaluating independent projects, no incremental analysis is necessary between projects. Each project is evaluated separately from others, and more than one project can be selected. Therefore, the only comparison is with the do-nothing alternative for each project. Question 7 options: True False 10. Given the following time events and incremental cash flow, if the MARR is 12% per year, which alternative should be selected on the basis of rate of return? Assume alternative B requires...
Machines that have the following cost are under consideration for a new manufacturing process. Which is...
Machines that have the following cost are under consideration for a new manufacturing process. Which is the best alternative using the mutually exclusive method or incremental method (IRR) comparison? The MARR is 10% compounded semiannually. Which is the best alternative? Machine A Machine B First cost $53,000 $72,000 Semiannual operating cost Semiannual income Semiannual income gradient Salvage Value 10 000 20,000 8,000 15,000 200 9,000 200 11.000 Life in year a IRR incremental = 10% IRR incremental = 7% IRR...
Which alternative of the three alternatives below should be selected if the MARR = 6%? Use...
Which alternative of the three alternatives below should be selected if the MARR = 6%? Use the following to compare projects: a. PW analysis b. B/C ratio for each project c. Incremental B/C ratio assessment (define Defender and Challenger in each analysis) d. IRR for each project over its respective service life e. Incremental IRR using the same (a common) number of years for each project Are any of the projects acceptable? Are any not acceptable? Which project would you...
Question 3 (10 marks) a) Six mutually exclusive projects A-F are being considered by a company....
Question 3 (10 marks) a) Six mutually exclusive projects A-F are being considered by a company. They have been ordered by first costs so that project A has the lowest first cost, and F the highest. The table below provides information on the IRR and incremental IRR of each investment. For example, the IRR of C is 11 % ; the incremental IRR going from A to C is 13 % and the incremental IRR from B to C is...
1. In RoR analysis, IRR is determined based on assumption that (a) EUAB/EUAC=1 (c) EUAB=EUAC (b)...
1. In RoR analysis, IRR is determined based on assumption that (a) EUAB/EUAC=1 (c) EUAB=EUAC (b) EUAW=0 (d) all of given 2. While performing incremental analysis, (a) alternative with smaller cost is added into other with larger cost (b) alternative with smaller cost is subtracted from other with larger cost (c) alternative with larger cost is added into other with smaller cost (d) none of all 3. Incremental analysis is perform on three alternative (A, B and C) and AB/Cc...
Question 2 25 points Save A Machines that have the following cost are under consideration for...
Question 2 25 points Save A Machines that have the following cost are under consideration for a new manufacturing process. Which is the best alternative using the IRR incremental comparison? Machine A Machine B First cost Semia ual operating cost Semiannual income Semiannual income gradient Salvage Value Life in year $42,000 8,000 15,000 100 $70,000 9,000 21,000 100 9,000 11,000 4 a. IRR incremental 20.9% b. IRR incremental 22.9% C. IRR incremental-20.9% ^ d. IRR incremental 25.9% Moving to another...
1. Which alternative of the three alternatives below should be selected if the MARR = 6%?...
1. Which alternative of the three alternatives below should be selected if the MARR = 6%? Use the following to compare projects: PW analysis B/C ratio for each project Incremental B/C ratio assessment IRR for each project over its respective service life Incremental IRR using the same (a common) number of years for each project Are any of the projects acceptable? Are any not acceptable? Which project would you recommend and why? Alternatives: A B C First Cost $800 $300 ...
Either of the cost alternatives shown below can be used in a chemical refining process. If the company’s MARR is 15% per year, determine which should be selected on the basis of an incremental ROR ana...
Either of the cost alternatives shown below can be used in a chemical refining process. If the company’s MARR is 15% per year, determine which should be selected on the basis of an incremental ROR analysis. A B First cost ,$ − 40,000 − 61,000 Annual cost, $/year − 25,000 − 19,000 Salvage value, $ 8,000 11,000 Life, years 5 5 5 - A. B. C. D. E. F. The incremental rate of return computed using a present worth analysis...
Question 3 10 pts Which alternative should be selected using incremental rate of return analysis, if MARR = 10.5%? B C D $3,500 $9,000 $3,000 738 1,793 1467 JO Do-nothing A First costo $9,000 Annual 1,626 benefit Life 10 yrs 12.5% ROR 16.5% 15.0% 0.0% OB, because its ROR is the highest something other than C, because C costs the most initially OC because C has the highest annual benefit OC, because the C-B increment has a ROR of 14.03%...
in the incremental analysis question, how did we calculate the
IRR of these two alternatives (C-A)? can you show it to me step by
step?
Solution The next largest investment is in Alternative C, so examine the incremental investment of C over A. In the table below the IRR of C-A is shown. Alternative C- A Capital $12,000 $14,400 $2,400 investment $2,500 $3,050 $550 Net annual ncome 13.48% 15.86% IRR 12.99% 15.86% > MARR, so Alternative C "wins."
Solution The...
Machines that have the following cost are under consideration for a new manufacturing process. Which is the best alternative using the mutually exclusive method or incremental method (IRR) comparison? The MARR is 10% compounded semiannually. Which is the best alternative? Machine A Machine B First cost $53,000 $72,000 Semiannual operating cost Semiannual income Semiannual income gradient Salvage Value 10 000 20,000 8,000 15,000 200 9,000 200 11.000 Life in year a IRR incremental = 10% IRR incremental = 7% IRR...
Question 3 (10 marks) a) Six mutually exclusive projects A-F are being considered by a company. They have been ordered by first costs so that project A has the lowest first cost, and F the highest. The table below provides information on the IRR and incremental IRR of each investment. For example, the IRR of C is 11 % ; the incremental IRR going from A to C is 13 % and the incremental IRR from B to C is...
1. In RoR analysis, IRR is determined based on assumption that (a) EUAB/EUAC=1 (c) EUAB=EUAC (b) EUAW=0 (d) all of given 2. While performing incremental analysis, (a) alternative with smaller cost is added into other with larger cost (b) alternative with smaller cost is subtracted from other with larger cost (c) alternative with larger cost is added into other with smaller cost (d) none of all 3. Incremental analysis is perform on three alternative (A, B and C) and AB/Cc...
Question 2 25 points Save A Machines that have the following cost are under consideration for a new manufacturing process. Which is the best alternative using the IRR incremental comparison? Machine A Machine B First cost Semia ual operating cost Semiannual income Semiannual income gradient Salvage Value Life in year $42,000 8,000 15,000 100 $70,000 9,000 21,000 100 9,000 11,000 4 a. IRR incremental 20.9% b. IRR incremental 22.9% C. IRR incremental-20.9% ^ d. IRR incremental 25.9% Moving to another...
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