Problem Set 5 This problem set is to be done individually and submitted to Blackboard no later than Tuesday, April 21", 11:59 PM. Late submissions will be penalized per the guidelines set out in the course syllabus. Scanned copies of hand-written solutions are acceptable, as long they are easily legible and submitted as one file. All work must be shown. The problem set can be completed by hand or Excel. Question 1 (10 points): The packaging company wants to build a warehouse in Connecticut. An engineer has identified four different location options. The initial cost and annual cash flow estimates are shown in the table below for each location. Initial cost Annual savings from year 1 Savings increased by Life, years Location A 200K 22K 15% from year 2 Location B 250K 32K 1K from year 2 20 Location 190K 19.5K till year 5 3K from year 6 Location D 350K 42K till year 3 10% from year 4 30 20 a) If the options are independent and MARR is 15%, which should be selected? Justify answer using ROR. b) If the options are mutually exclusive and MARR is 15%, which should be selected? Just answer using ROR. c) If MARR is 22%, which should be selected if they are independent options? d) If MARR is 22%, which should be selected if they are mutually exclusive? Question 2 (10 points): The following three land options are under consideration for a water treatment facility. Option 1: land cost of $40 million, facility first cost of $150 million a year, benefits of $50 million a year, disbenefits of $25 million a year, and useful life of 10 years Option 2: land cost of $40 million, facility first cost of $150 million a year, benefits of $50 million a year, disbenefits of $19 million a year, and useful life of 15 years Option 3: land cost of $55 million, facility first cost of $150 million a year, benefits of $10 million a year, indirect annual net revenue of $15 million, and useful life of 20 years If the options are mutually exclusive and MARR is 8%, use benefit-cost analysis to select the best alternative