Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Answer ASAP An engineer is choosing between three different alternatives for a machine component he needs to complete his biorefinery. He summarized the pertinent information

Answer ASAP

An engineer is choosing between three different alternatives for a machine component he needs to complete his biorefinery. He summarized the pertinent information about these alternatives in the tables below. Assume a study period of 8 years

Alternative

Investment Cost Salvage Value Useful Life Depreciation Method
A 100,000 25,000 8 Sum of the Years
B 70,000 20,000 4 Straight Line
C 76,000 5,000 6 Declining Balance

The table below shows the projected net cash flows for each of the alternatives.

EOY Alternative A Alternative B Alternative C
1 30,000 -20,000 30,000
2 40,000 40,000 30,000
3 50,000 50,000 30,000
4 60,000 8,000 30,000
5 70,000 - 30,000
6 80,000 - 30,000
7 90,000 - -
8 100,000 - -

Note: Please take note or a screenshot of the information presented here, this will be the basis of the succeeding questions. You will not be able to go back to this page.

Round all your answers to 2 decimal places, do not round intermediate solutions. For questions #7, 10, and 12, just type in the letter of the alternative.

1. What is the net cash flow for Alternative A on year 8?

2. What is the net cash flow for Alternative B on year 8?

3. What is the net cash flow for Alternative C on year 8?

Assuming a MARR of 10%, evaluate the three alternatives and recommend which among the three alternatives the engineer should invest in the PW method.

4. What is the PW of Alternative A?

5. What is the PW of Alternative B?

6. What is the PW of Alternative C?

7. Which of the three alternatives would you recommend based on the PW method?

Assuming a MARR of 12.5%, evaluate alternatives A and B and recommend which between the two alternatives the engineer should invest in using the FW method.

8. What is the FW of Alternative A?

9. What is the FW of Alternative B?

10. Which between the two alternatives would you recommend using the FW method?

Assuming a MARR of 8%, evaluate alternatives B and C and recommend which between the two alternatives the engineer should invest in using the AW method.

11. What is the AW of Alternative B?

12. Which between the two alternatives would you recommend using the AW method?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Analysis Of Financial Data

Authors: Gary Koop

1st Edition

0470013214, 978-0470013212

More Books

Students also viewed these Finance questions

Question

What are the stages of project management? Write it in items.

Answered: 1 week ago

Question

why do consumers often fail to seek out higher yields on deposits ?

Answered: 1 week ago

Question

Discuss consumer-driven health plans.

Answered: 1 week ago