The contract offered by Taker Bros. is a favorable one, which Raleigh Soap plans to accept. Raleigh

Question:

The contract offered by Taker Bros. is a favorable one, which Raleigh Soap plans to accept. Raleigh management has set a 15% before-tax minimum attractive rate of return as the criterion for any of the projects. Which projects should be undertaken? Ten capital spending proposals have been made to the budget committee as the members prepare the annual budget for their firm. Each independent project has a 5-: .life and no salvage value.

(a) Sed on a MARR of 14%, which projects should be approved?

(b) Rank orders all the projects in order of desirability.

Uniform Annual Computed Initial Cost Benefit Rate of Project (thousands) (thousands) $2.98 Return 15% 5.58 15 25 1.53 16

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important... MARR
Minimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other...