Two mutually exclusive design alternatives are being considered. The estimated cash flows for each alternative are given below. The MARR is 10% per year. The decision-maker can sele these alternatives or decide to select none of them. Make a recommendation based on the following methods. Design Y Investment cost Annual revenue Annual cost Useful life Salvage value a. Net PW Based on PW method, Design Z is more economical. b. The modified B/C ratio of Design Y is 36 (Round to two decimal places) The modified B/C ration of Design Z is .36 (Round to two decimal places) c. The incremental B/C ratio is 36 (Round to two decimal places) Therefore, based on the B/C ratio method, Design Z is more economical d. The discounted payback period of Design Y is 4.5 years (Round to one decimal place) The discounted payback period of Design Z is 7.3 years (Round to one decimal place) $140,000 $45,138 $9,314 15 years $14,700 $135,999 Design Z $275,000 $85,654 $27,386 15 years $33,000 $176,091 Therefore, based on the payback period method, Design Y would be preferred. (e) Why could the recommendations based on the payback period method be different from the other two methods? A. because the payback period gives more weight to the cash flows after the payback period B. because the payback period method ignores the cash flows after the payback period

Two mutually exclusive design atsernatives are being considered. The estimated cash flows for ench altemative are given bolow. The MARR is 10 s, per yeat The decision-maker can sein these ahnernetives or decide to select none of them. Make a recommendation based on the following methods a Based on PW method, Design z is more economical. 6) The modfied eic rate of Detign Y h (Round is tho vecimal places) The modified B,C maton of Detign Z is (Round to two decimal places) c. The incremental Be ratio is Round to two decimal places) Therefore, based on the B/C ratio method, Oesion 2/ is more econonical d. The discounted paytack period of Detign Y is years (Round ba cone decinal place) The decounted partack period of Design Z is yeare (Round to ane decimal place) (a) Wry could the reconmendations based on the payback period method be dfferent from the ofher two methodr? A. becaise the parback period gives more weight to the cash fow afher me paybock period 18. becuse the paytack period method ignoces the caph flow aher the paptack perios