11) Using a MARR of 15%, the preferred alternative is A) I C) B D) D 12) Conside

Question

11) Using a MARR of 15%, the preferred alternative is A) I C) B D) D 12) Consider the mutually exclusive alternatives given in the table below Assuming repeatabilty able below Assuming repeatability 12) which alternative would you select if the MARR: 10% per year? Capital Investment Uniform Annual Savings Useful Life ( years) Alt X 500,000 131,900 5 Alt Y 250,000 40,690 10 Alt Z 400,000 44,050 20 A) Do nothing B) Alt. X C) Alt. z D) Alt. Y SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. Answer the question. 13) Find the 10 uniform annual deposits that can provide a single withdrawal of $23,750,2 13) years after the last deposit is made at an interest rate of 18% per year.

Explanation / Answer

12.

D.Alt. Y

Working note:

As per the LCM method, common life for each alternative will be 20 years.

Present worth = present value of annual saving – present value of costs

Present worth of alt. X = 131900*(1-1/1.1^20)/.1 – 500000 – 500000/1.1^5 – 500000/1.1^10 – 500000/1.1^15

Present worth of alt. X = $10.72

Present worth of alt. Y = 40690*(1-1/1.1^20)/.1 - 250000 - 250000/1.1^10

Present worth of alt. Y = $31.08

Present worth of alt. Z = 44050*(1-1/1.1^20)/.1 – 400000

Present worth of alt. Z = -$24977.5

Since, present worth of alt. Y is highest and positive among all the alternatives, so alternative Y should be selected.

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13.

Let, annual deposit = P

23750 = (P*((1+R)^10 - 1)/R)*(1+R)^2

23750 = (P*((1+.18)^10 - 1)/.18)*(1+.18)^2

23750 = P*32.75

P = 23750/32.75

P = $725.19 approx.

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Data for question 11 is not given.

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