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Engineering economics The following mutually exclusive investment alternatives have been presented to you in the following table. The life of all alternatives is 10 years.
Engineering economics
The following mutually exclusive investment alternatives have been presented to you in the following table. The life of all alternatives is 10 years. Use this information to solve the following questions. (Use MARR = 15%) Capital Investment Annual Expenses Annual Revenues Salvage Value Rate of Return A B D E $60,000 $90,000 $40,000 $30,000 $70,000 30,000 40,000 25,000 15,000 35,000 40,000 52,000 38,000 28,000 45,000 10,000 15,000 10,000 10,000 15,000 ??? 7.4% 30.8% 42.5% 9.2% a) Find the rate of return for alternative A. (4 marks) b) If the alternatives are mutually exclusive, Based on rate of return analysis, select the best alternative. (12 marks) c) Suppose that all alternatives are independent; which alternative should you select?(4 marks)
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