Mutually exclusive investment alternatives problem

Anonymous
timer Asked: Nov 23rd, 2016

Question description

Engineering projects, A, B1, B2, C are being considered with cash flows estimated over 10 years are shown in the accompanying table. Projects B1 and B2 are mutually exclusive, Project C depends upon B2, and Project A depends upon B1. The capital investment budget limit is $100,000, and the MARR is 12% per year.

  • List all possible alternatives
  • Develop the net cash flows for all feasible alternatives.
  • Which investment alternative (combination of projects) should be selected? Use the Present worth (PW method

A

B1

B2

C

Capital Investment

$30,000

$22,000

$70,000

$82,000

Annual revenues less expenses

$8,000

$6,000

$14,000

$18,000

Market Value

$3,000

$2,000

$5,000

$7,000

Useful life (years)

10

10

10

10

  • AW method
  • FW method

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