1.20) A Marine Design Office plans on buying a new Computer-Aided Design System, having an expected 10-year useful life, that has been proposed as able to save 5% of their man-hours on typical design projects. The office currently employs 25 professionals at an average man-hour cost of $95 and 50 support staff at an average manhour cost of $70. The office workload is projected to be 150,000 man-hours per year. The cost of funds for the project is expected to be 8 %. In order to have a break-even outcome and proceed with this plan, the purchase cost of the system ($) should be most nearly.

a. 2,900,000

b. 3,900,000

c. 5,900,000

d. 8,500,000

2. Consider the following three mutually exclusive alternatives:

	A	B	C
Initial cost	6000	8000	9000
Uniform annual benefit	1980	2100	2800
Salvage value	0	0	0
Useful life (years)	5	5	5
Computed rate of return	19%	10%	17%

The calculated IRR_B-A = 0%, and IRR_C-A=11%,

For what range of values of MARR is Alternative A the preferred alternative?

For what range of values of MARR is Alternative C the preferred alternative?