Two alternatives are being considered: Both alternatives provide an identical benefit. (a) Compute the payback period if

Question:

Two alternatives are being considered:

A в $500 $800 Initial cost 150 200 Uniform annual cost 8 Useful life, in years

Both alternatives provide an identical benefit.

(a) Compute the payback period if Alt. B is purchased rather than Alt. A.

(b) Use a MARR of 12% and benefit-cost ratio analysis to identify the alternative that should be selected.

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... Payback Period
Payback period method is a traditional method/ approach of capital budgeting. It is the simple and widely used quantitative method of Investment evaluation. Payback period is typically used to evaluate projects or investments before undergoing them,...