Question: Consider four mutually exclusive alternatives, each having an 8-year useful life: A B C Fist cost 1000 800 D 600 500 Uniform Annual Benefit

Consider four mutually exclusive alternatives, each having an 8-year useful life: A

Consider four mutually exclusive alternatives, each having an 8-year useful life: A B C Fist cost 1000 800 D 600 500 Uniform Annual Benefit 125 120 97 122 Salvage value 750 500 250 Solution: 1. Rank of alternatives: 2. Perform the IRR analysis, yields the following table FYI: A ROR B C D C-D B-D A-D A-B 10.34% 11.95% 11.91% 18.62% -3.69% 5.25% 5.20% 5.11% 3. According to the results above, we can construct the choice table between 0% and 100% as: (if no MARR is for a particular alt., use N/A in the blank.) Alt. A for MARR between % and %; Alt. B for MARR between % and %; Alt. C for MARR between % and %; Alt. D for MARR between % and %; % and %. Do-nothing for MARR between 4. If MARR = 8%, then select alternative

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