Econ prob 3

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PROBLEM 3 (20 points) 3a. Why do we need to perform incremental analysis when comparing multiple alternatives using the B-C ratio? Explain in no more than 4 sentences. 3b. Using concepts discussed in class about measures of risk, explain in no more than 4 Sentences, why it may not necessarily be worth pursuing a project even though it has been calculated to have a positive PW value given a company's MARR. in no more For questions 3c and 3d, choose the MOST APPROPRIATE option from only these 4 types of analyses: payback period analysis (PP), breakeven point analysis (BP), spiderplot analysis (SP), and scenario analysis (SC). 3c. Which type of analysis should be performed if a company wants to determine which single project factor should they focus on improving to increase project profitability? Justify your answer than 4 scntcnccs. (Assume that any changes in one project factor have no effect on the other project factors.) 3d. A new, small-time lending company strictly collects its dues in a series of equal monthly payments throughout the duration of a 3-year loan. Instead of basing it on an MARR, they set the required monthly payments such that by the borrower's 24th monthly payment, the company would have already collected an amount equal to the loan principal + 158. They treat any amount collected after the 24th monthly payment as risk premium. Which type of analysis is most similar to the way that the company determines its monthly payment amounts? Justify your answer in no more than 4 sentences. PROBLEM 3 (20 points) 3a. Why do we need to perform incremental analysis when comparing multiple alternatives using the B-C ratio? Explain in no more than 4 sentences. 3b. Using concepts discussed in class about measures of risk, explain in no more than 4 Sentences, why it may not necessarily be worth pursuing a project even though it has been calculated to have a positive PW value given a company's MARR. in no more For questions 3c and 3d, choose the MOST APPROPRIATE option from only these 4 types of analyses: payback period analysis (PP), breakeven point analysis (BP), spiderplot analysis (SP), and scenario analysis (SC). 3c. Which type of analysis should be performed if a company wants to determine which single project factor should they focus on improving to increase project profitability? Justify your answer than 4 scntcnccs. (Assume that any changes in one project factor have no effect on the other project factors.) 3d. A new, small-time lending company strictly collects its dues in a series of equal monthly payments throughout the duration of a 3-year loan. Instead of basing it on an MARR, they set the required monthly payments such that by the borrower's 24th monthly payment, the company would have already collected an amount equal to the loan principal + 158. They treat any amount collected after the 24th monthly payment as risk premium. Which type of analysis is most similar to the way that the company determines its monthly payment amounts? Justify your answer in no more than 4 sentences