1. the MARR is 15%. Three alternatives are available and the associated cash flo
ID: 2480733 • Letter: 1
Question
1. the MARR is 15%. Three alternatives are available and the associated cash flow is as follow:
Answer the following in this format: 1.23
The payback period for Alternative A is
The payback period for Alternative B is
The payback period for Alternative C is
Based on Payback period analysis, Alternative should be selected
2.
Find the conventional payback period for the following project:
in years
3.
With interest at 10%, what is the benefit-cost ratio for this government project?
4.
A tax exempt municipality is considering the construction of a new municipal waste water treatment facility. Two different sites have been selected as technically, politically, socially, and financially feasible. The city council uses 6% interest rate for all analyses for public projects. The expected cash flow for the two alternatives are as follow:
What is the incremental benefit/cost ratio?
Year A B C First Cost $1,700 $2,100 $3,750 Annual Benefit $1,000 $1,000 $1,000 Useful Life 2 3 6Explanation / Answer
1. Payback Period = Intial Cost / Annual CAsh Flows
Project A = 1700 / 1000 = 1.7 years
Project B = 2100 / 1000 = 2.1 years
Project C = 3750 / 1000 = 3.75 years
Project A has the lowest oayback period so it should be selected.
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