13. Beta's benefit/cost (B/C) ratio. 14. Gamma's benefit/cost (B/C) ratio. B. Problems and Questions 15. The incremental B/C ratio between Alpha and Beta. 16. The incremental B/C ratio between Alpha and Gamma. Delta Company is considering the production and sale of new precision equipment. The key parameters of the three types of precision equipment under scrutiny by Delta Company are shown below (Please note that all parameter values and equipment names are fictitious). 17. The best precision equipment based on the benefit-cost ratio. 18. Alpha's Internal Rate of Return (IRR). Alpha Beta Gamma Parameters 1. Initial Cost ($) 19. Gamma's Internal Rate of Return (IRR). 260,000 295,000 20. The incremental Internal Rate of Return (AIRR) between Beta and Gamma. 2. Revenues ($) 175,000 at EOY1 decreasing by 0.5% annually thereafter. 240,000 158,000 at EOY1 increasing by $3,000 annually thereafter 90,000 at EOY1 increasing by 1% annually thereafter 175,000 at EOY1 increasing by 1.0% annually thereafter. 21. The best precision equipment based on the IRR method. 22. Beta's External Rate of Return (ERR). 23. Gamma's External Rate of Return (ERR). 3. Operating costs ($) 122,000 at EOY1 decreasing by $1,000 annually thereafter 120,000 at EOY1 to EOY5 inclusively; $110,000 from EOY6 to EOY10 inclusively. 24. The incremental External Rate of Return (AERR) between Alpha and Gamma. 50,000 40,000 -20,000 25. 4. End-of-life salvage value ($) 5. Useful life (years) The incremental External Rate of Return (AERR) between Beta and Gamma. 5 10 10 26. The best precision equipment based on the external rate of return (ERR) method. 2 All parameter values are fictitious. EOY = End-of-year Industry Standard = 3 years MARR = 10% 27. If the company's precision equipment budget is $550,000, which precision equipment(s) should it purchase assuming that purchases of precision equipment are independent