Five revenue projects are under consideration by El Paso Garment for improving t

Question

Five revenue projects are under consideration by El Paso Garment for improving the material flow through an assembly line. The initial cost of each project is shown below (annual income and costs not shown) PROJECT C D Initial cost ,$ Life, yrs 7.000 16,000 9.000 3.000 23.000 From the calculations shown below, determine which project if any, should be undertaken. The company's MARR is 14% per year. If other calculations must be made in order to make a decision, select DN Comparison E vs DN A vs E D vs DN B vs E B vs D B vs A C vs DN C vs B vs DN A vs DN B vs C D vs D vs E Increimental rate of return 13% 19% 11% 15% 24% 21% 790 19% 12% 10% 33% 33% 29% (a) Select DN (b) Select Project B (c) Select Project C (d) Select Project D (e) Select Project E

Explanation / Answer

Option e.

Need to select Project E, since the incremental IRR when project E is compared with other options its IRR, is greater than MARR of 14%.

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