Engineering Economics/Construction Project Management Question
Engineering Economics/Construction Project Management Question
The format on some of the questions seems to have been slightly altered when I pasted the text into this textbox, so I also attached screenshots of the questions.
Your company is evaluating the three mutually exclusive mechanical systems shown in the table below. Using a MARR of 15%, which alternative should be chosen?
A
B
C
Investment
$110,000
$125,000
$138,000
Useful life
10 years
10 years
10 years
Total annual expenses
$53,800
$51,625
$45,033
a.
Alternative C
b.
Alternative A
c.
Alternative B
1 points
QUESTION 2
You are analyzing six mutually exclusive alternatives using the IRR method. The useful life of each alternative is 10 years and the MARR is 10%. Cash flow information is given in Figures 1 & 2 below.
Figure 1. Total Cash Flows for each Alternative
A
B
C
D
E
F
Capital Investment
$900
$1,500
$2,500
$4,000
$5,000
$7,000
Annual Revenues
150
276
400
925
1,125
1,425
IRR on total CF
10.6%
13.0%
9.6%
19.1%
18.3%
15.6%
Figure 2. Incremental Analysis using the IRR Method
∆(B – A)
∆(D – B)
∆(E – D)
∆(F – E)
∆ Capital Investment
$600
$2,500
$1,000
$2,000
∆ Annual Revenues
$126
$649
$200
$300
∆ IRR
16.4%
22.6%
15.1%
8.1%
a.
Alternative B
b.
None of the above
c.
Alternative D
d.
Alternative A
e.
Alternative E
f.
Alternative F
g.
Alternative C
1 points
QUESTION 3
Four mutually exclusive projects are shown below. Which, if any, of these projects should be selected? Please use an interest rate of 12%.
Alt. A
Alt. B
Alt. C
Alt, D
Investment
$23M
$18M
$31M
$26M
Annual O&M
$1.8M
$1.2M
$2.1M
$2.0M
Salvage Value
$2.4M
$2.2M
$4.0M
$3.1M
Annual Benefits
$5.0M
$4.5M
$6.5M
$5.8M
Useful Life
50 years
50 years
50 years
50 years
a.
Alt. C
b.
Alt. A
c.
Alt. D
d.
None should be selected
e.
Alt. B
