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The operations manager at Western Playland in Sunland Park, NM, is considering two alternatives for safety equipment that will be attached to a new rollercoaster.
The operations manager at Western Playland in Sunland Park, NM, is considering two alternatives for safety equipment that will be attached to a new rollercoaster. The cash flow estimates for these two alternatives (A & B) are shown below: Alternative A Alternative B Initial Cost, $ $30,000 -$65,000 Maintenance Cost, $/year $9,000 $6,000 Salvage value, $ $5,000 $10,000 Life Period, years 3 6 Perform an incremental ROR analysis of alternatives A and B. Assume a MARR of 10% a) Tabulate the incremental cash flows for comparing alternatives A-B Year b) You are now asked to write the incremental ROR (1*) equation to find i* for the above comparison. Do not solve. State whether multiple i* values satisfy this equation, and your justification. c) Suppose a unique ROR I' satisfies the above equation. Under what condition Alternative A would be selected? (One sentence only)
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