1.Three mutually exclusive alternatives (i.e., you will either do nothing or choose only one, you CANNOT do them all they mutually exclude one another) are given below. Choose the best of the three alternative projects. Since they have unequal length lives, you should use either an Annual Worth (AW) analysis or an incremental IRR or incremental ERR analysis. Remember, Present Worth (PW) and Future Worth (FW) require you to adjust the cash flows to compare the alternatives on equal-length life bases and this is more work than I think it is worth. You know how I feel, AW is the easiest and is what I would choose! MARR is 10%

2. What is the straight-line depreciation amount per year for 4 years with an original investment of $120,000 (this is your cost basis) with a salvage value of $20,000? 3. What is the Internal Rate of Return (IRR) for project 2 in problem 1? Note: Accuracy to 1% is fine. 4. What is the Future Worth (FW) of project 3 in problem 1? 5. Even though they give different numerical values do the conventional and modified benefit-to-cost ratios still make the same decision concerning good versus bad projects? 6. Name some of the drawbacks of benefit-to-cost ratio approach?

Year 0 Project 2 -9000 Project 1 -8000 2500 2500 1 2 2500 2500 Project 3 -7000 3100 3100 3100 3 2500 2500 2500 2500 2500 4 5 2500 2500 6