Answered step by step
Verified Expert Solution
Question
1 Approved Answer
pls show working and give answer! A manufacturer, whose MARR is 7%, is considering two alternative plant layouts, A1 and A2. The first cost represent
pls show working and give answer!
A manufacturer, whose MARR is 7%, is considering two alternative plant layouts, A1 and A2. The first cost represent the expenses of rearranging the current layout to the alternative new layout and the annual savings represent the reduction in the production costs of the new layout compared to the current layout. Using the internal rate of return as the decision criterion, what course of action do you recommend? Year A1 A2 $160,000 First Cost 0 $145,000 Annual Savings 1 to infinity $11,000 $15,000 O Select Alt A2 because it is the more expensive option and the incremental rate of return, 26.67%, is higher than the MARR O Select Alt A2 because it generates more savings in each year. O Select Alt A1 because its rate of return, 7.59%, is higher than the MARR O Select Alt A2 because its rate of return, 9.38%, is higher than the MARRStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started