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A team of reliability engineers has developed four mutually exclusive (i.e. must choose only one) alternative systems for decreasing the downtimes of critical production systems. The alternatives have maintenance costs and differences in real time monitoring technologies. Their cost data is tabulated: All alternatives have a five-year design lifetime. Management has agreed to implement any alternative the reliability engineers have proposed. You are the engineer in charge of choosing among the alternatives. Company MARR is 20% per year on any additional investments it makes. Use incremental IRR to analyze this decision. 1. Which alternative should be the base alternative? a. Lyncott b. Wiley c. Killerbee d. Jimboranto e. Do nothing 2. To which alternative should the base alternative be first compared to? a. Lyncott b. Wiley c. Killerbee d. Jimboranto e. Do nothing 3. For the first pairwise comparison, what is the incremental IRR computed? a. 43.28% b.11.38%c.17.40 d.20.03%e.16.37% 4. For the first pairwise comparison, which alternative should be chosen? a. Lyncott b. Wiley c. Killerbee d. Jimboranto e. Do nothing 5. For the second comparison, which alternative is the new challenger? a. Lyncott b. Wiley c. Killerbee d. Jimboranto e. Do nothing 6. For the second pairwise comparison, what is the computed incremental IRR? a. 43.28% b. 31.90% c. 17.40 d. 20.03% e. 16.37% 7. Which alternative should you ultimately decide as the best? a. Lyncott b. Wiley c. Killerbee d. Jimboranto e. Do nothing 8. What is the Net Present Value of costs for the best alternative? a. 4,892,959.10 c. 6,035,963.22 e. 4,537,356.67 b. 5,962,789.35 d. 5,228,963.38 A team of reliability engineers has developed four mutually exclusive (i.e. must choose only one) alternative systems for decreasing the downtimes of critical production systems. The alternatives have maintenance costs and differences in real time monitoring technologies. Their cost data is tabulated: All alternatives have a five-year design lifetime. Management has agreed to implement any alternative the reliability engineers have proposed. You are the engineer in charge of choosing among the alternatives. Company MARR is 20% per year on any additional investments it makes. Use incremental IRR to analyze this decision. 1. Which alternative should be the base alternative? a. Lyncott b. Wiley c. Killerbee d. Jimboranto e. Do nothing 2. To which alternative should the base alternative be first compared to? a. Lyncott b. Wiley c. Killerbee d. Jimboranto e. Do nothing 3. For the first pairwise comparison, what is the incremental IRR computed? a. 43.28% b.11.38%c.17.40 d.20.03%e.16.37% 4. For the first pairwise comparison, which alternative should be chosen? a. Lyncott b. Wiley c. Killerbee d. Jimboranto e. Do nothing 5. For the second comparison, which alternative is the new challenger? a. Lyncott b. Wiley c. Killerbee d. Jimboranto e. Do nothing 6. For the second pairwise comparison, what is the computed incremental IRR? a. 43.28% b. 31.90% c. 17.40 d. 20.03% e. 16.37% 7. Which alternative should you ultimately decide as the best? a. Lyncott b. Wiley c. Killerbee d. Jimboranto e. Do nothing 8. What is the Net Present Value of costs for the best alternative? a. 4,892,959.10 c. 6,035,963.22 e. 4,537,356.67 b. 5,962,789.35 d. 5,228,963.38
