X=3

Y=7

QUESTION 1. (35p) a. Hidromek is a globally known manufacturer of construction machinery. The company wants to build a spare part storage facility in the Ankara. A civil engineer who is alumni of YTU has identified four different location options. The initial cost of earthwork and prefab building and the annual net cash flow estimates are given in following table. The annual net cash flow series vary due to differences in maintenance, labor costs, transportation charges etc. If the MARR is 10%, use incremental ROR analysis to select the one economically best location. In the ROR analysis, use only present value analysis to compare alternatives. b. Explain why we need incremental approach for ROR analysis. c. Give an example about a project that we need to use incremental ROR analysis