Business, 11.03.2020 06:27 yobanajk

5. Consider these two alternatives. (11.2)

Alternative 1 Alternative 2

Capital investment $4,500 $6,000

Annual revenues $1,600 $1,850

Annual expenses $400 $500

Estimated market $800 $1,200

Value Useful life 8 years 10 years

Suppose that the capital investment of Alternative 1 is known with certainty. By how much would the estimate of capital investment for Alternative 2 have to vary so that the initial decision based on these data would be reversed? The annual MARR is 15% per year.

b. Determine the life of Alternative 1 for which the AWs are equal 11-8. The Ford Motor Company is considering three mutually exclusive electronic stability control systems for protection against rollover of its automobiles. The investment (study) period is four years, and MARR is 12% per year. Data for the fixture costs of the systems are as follows.

Alternatives

A B C

Capital investment $12,000 $15,800 $8,000

Annual savings $4,000 $5,200 $3,000

MV (after 4 years) $3,000 $3,500 $1,500

IRR 19.2% 18% 23%

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5. Consider these two alternatives. (11.2)

Alternative 1 Alternative 2

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