problem: 34b - Please use challenger-defender method to answer this question . show steps and formula where applicable.

Problems 299 A more detailex problem 8-31 reye tually exclusiu Both have no sala ailed examination of the situation in 21 reveals that there are two additional exclusive alternatives to be considered. no salvage value after a useful life of 10 plant and the benefits. The engineers examined six likely sites, together with the do-nothing alternative of keeping the plant at its present location. Their findings are summarized as follows: Alternative Initial Cost $4880 8000 Annual cost $4880 $2800 for first year, then increasing $200 per year Plant Location Denver Dallas San Antonio Los Angeles Cleveland Atlanta Chicago First Uniform Annual Cost (5000s) Benefit ($000s) $300 $52 550 137 450 117 750 167 150 200 0 18 struct a choice table for interest rates from (a) Construct a cha 49 0% to 100% (b) If the MARR 133 The owner of ad the MARR remains at 8%, which one of the six alternatives should be selected? ner of a downtown parking lot has employed civil engineering consulting firm to advise him the economic feasibility of constructing an office building on the site. Betty Samuels, a newly hired civil engineer, has been assigned to make the analysis. She has assembled the following data: The annual benefits are expected to be constant over the 8-year analysis period. (a) Construct a choice table for interest rates from 0% to 100%. (b) If the firm uses 10% annual interest in its eco- nomic analysis, where should the manufacturing plant be located? 8-35 An oil company plans to purchase a piece of vacant land on the corner of two busy streets for $50,000. On properties of this type, the company installs busi- nesses of three different types. Each has an estimated useful life of 15 years. The salvage land for each is estimated to be the $50,000 land cost. Net Annual Plan Cost" Type of Business Income Alternative Sell parking lot Keep parking lot Build 1-story building Build 2-story building Build 3-story building Build 4-story building Build 5-story building Total Net Annual Revenue $ 0 22.000 60,000 72,000 100,000 105,000 120,000 Total Investment $ 0 200,000 400,000 555,000 750,000 875,000 1,000,000 $ 83,000 $26,500 39,750 B 195,000 Conventional gas station Add automatic carwash Add quick carwash * Includes the value of the land. 115,000 31,200 * Improvements cost does not include $50,000 for the land. The analysis period is to be 15 years. For all alternatives, the property has an estimated resale salvage) value at the end of 15 years equal to the present total investment. 10) Construct a choice table for interest rates from 0% to 100%. b) If the MARR is 10%, what recommendation should Betty make? mis considering moving its manufacturing plant m Chicago to a new location. The industrial engi- Ting department was asked to identify the various natives together with the costs to relocate the (a) Construct a choice table for interest rates from 0% to 100%. (b) If the oil company expects a 10% rate of return on its investments, which plan (if any) should be selected? 8-36 The Financial Advisor is a weekly column in the A local newspaper. Assume you must answer the fol- lowing question. "I recently retired at age 65, and I have a tax-free retirement annuity coming due soon. 134 A firm is cons A from Chicago alternatives to