engineering economics

A.9. Assume that you are a consulting engineer, and your company car has just been totaled in wreck. You are now selecting a replacement car. Any of the three listed below is acceptable from a functional point of view. (a) Find the incremental rate of return for each pair of alternatives. (b) Draw an arrow diagram showing which alternative to choose if MARR = 15 percent. (c) Show the break points in the MARR (if any), and tell what ranges of MARR favor which alteratives. Type Cost new Annual O & M cost Annual increase O&M cost Resale value at EOY 4 A. Electra B. Monaco C. Montego $15,000 17,100 19,500 51/mi 48 $0.042/mi/yr 0.048 0.027 $3,000 4,500 4,500 45 The car will be driven about 20,000 miles per year and sold at the end of the fourth year. (Hint: Try i for B-A between 10 and 20 percent; C-A between 20 and 30 percent; C-B between 20 and 30 percent.) (Ans. (a) - A + B 15.3%, - A + C 23.2%, - B + C 29.5%; (b) see diagram below; (c) if MARR > 23.2%, select A; if MARR 23.2%, select A; if MARR