Exam 8: Choosing the Best Alternative
Exam 1: Making Economic Decisions9 Questions
Exam 2: Estimating Engineering Costs and Benefits12 Questions
Exam 3: Interest and Equivalence17 Questions
Exam 4: Equivalence for Repeated Cash Flows22 Questions
Exam 5: Present Worth Analysis16 Questions
Exam 6: Annual Cash Flow Analysis17 Questions
Exam 7: Rate of Return Analysis12 Questions
Exam 8: Choosing the Best Alternative12 Questions
Exam 9: Other Analysis Techniques18 Questions
Exam 10: Uncertainty in Future Events14 Questions
Exam 11: Depreciation16 Questions
Exam 12: Income Taxes for Corporations13 Questions
Exam 13: Replacement Analysis11 Questions
Exam 14: Inflation and Price Change9 Questions
Exam 15: Selection of a Minimum Attractive Rate of Return9 Questions
Exam 16: Economic Analysis in the Public Sector9 Questions
Exam 17: Accounting and Engineering Economy8 Questions
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Table 8.1
Cash flows related to three mutually exclusive capital equipment projects are given in table below.
Altermative Iritial Cost Computed ROR A \ 100,000 18\% \ 200,000 15\% \ 300,000 13\%
-?RoR for the second increment (C-B) is ___________.
Free
(Multiple Choice)
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Correct Answer:
D
Given the financial data for four mutually exclusive alternatives in the table below, determine the best alternative using the incremental rate of return (?RoR) analysis. MARR =10%.
A B C D First cost \ 15,000 \ 36,000 \ 21,200 45,000 O \&M Cost/year 1,600 400 900 1,000 Benefit/year 8,000 13,000 9,000 15,000 Salvage value 3,000 6,000 4,600 10,000 Life in years 4
Free
(Multiple Choice)
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Correct Answer:
B
Table 8.2 Given the financial data for three alternatives, find:
A Initial cost \ 600 \ 1,200 \ 400 EUAB 196 70 LiFe 10Years RoR 6.1\% 10.1\% 11.7\% MARR = 8%
ΔRoR (B-C) = 9.2%
-For a MARR of over 11.7% the best alternative is "Do nothing."
Free
(True/False)
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Correct Answer:
True
The cash flows for four mutually exclusive alternatives are provided in the table below.
If the useful life is 10 years for each alternative, find the best alternative using incremental rate of return analysis. MARR = 10%
P Q R Iritial Cost 19,000 16,000 11,000 8,500 EUAB 3,500 3,100 2,200 1,350
(Multiple Choice)
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Table 8.1
Cash flows related to three mutually exclusive capital equipment projects are given in table below.
Altermative Iritial Cost Computed ROR A \ 100,000 18\% \ 200,000 15\% \ 300,000 13\%
-?RoR for the increment (C- A) is ___________
(Multiple Choice)
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(76)
Table 8.1
Cash flows related to three mutually exclusive capital equipment projects are given in table below.
Altermative Iritial Cost Computed ROR A \ 100,000 18\% \ 200,000 15\% \ 300,000 13\%
-?RoR for the first increment (alt.B - alt.A) is ___________.
(Multiple Choice)
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(71)
Case Study 8
The cash flows for three mutually exclusive alternatives are given in table below. MARR = 4%.
Alt. A Alt. B Alt. C Initial cost \ 15,000 27,000 24,000 Annual benefits \ 4,500 7,600 6,500 RoR 15\% 13\% 11\% Life in years 5
-Determine the ?RoR for the second increment (Alt. B - Alt.A) if A was retained during the first incremental analysis. ___________________.
(Multiple Choice)
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Case Study 8
The cash flows for three mutually exclusive alternatives are given in table below. MARR = 4%.
Alt. A Alt. B Alt. C Initial cost \ 15,000 27,000 24,000 Annual benefits \ 4,500 7,600 6,500 RoR 15\% 13\% 11\% Life in years 5
-?RoR for the first increment (Alt. C-Alt. A) is ___________________.
(Multiple Choice)
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(76)
Table 8.2 Given the financial data for three alternatives, find:
A Initial cost \ 600 \ 1,200 \ 400 EUAB 196 70 LiFe 10Years RoR 6.1\% 10.1\% 11.7\% MARR = 8%
ΔRoR (B-C) = 9.2%
-For a MARR of 11 %, the most attractive is Alt. C.
(True/False)
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Table 8.2 Given the financial data for three alternatives, find:
A Initial cost \ 600 \ 1,200 \ 400 EUAB 196 70 LiFe 10Years RoR 6.1\% 10.1\% 11.7\% MARR = 8%
ΔRoR (B-C) = 9.2%
-The most attractive alternative for a MARR of 8% is Alt. C.
(True/False)
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Case Study 8
The cash flows for three mutually exclusive alternatives are given in table below. MARR = 4%.
Alt. A Alt. B Alt. C Initial cost \ 15,000 27,000 24,000 Annual benefits \ 4,500 7,600 6,500 RoR 15\% 13\% 11\% Life in years 5
-The best alternative for a MARR of 4.0% using the incremental rate of return analysis is ____________.
(Multiple Choice)
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Table 8.1
Cash flows related to three mutually exclusive capital equipment projects are given in table below.
Altermative Iritial Cost Computed ROR A \ 100,000 18\% \ 200,000 15\% \ 300,000 13\%
-Based on ?ROR analysis, the best alternative , for a MARR of =10%, is _________________.
(Multiple Choice)
4.8/5
(85)
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