Show all formulas and steps using engieering economics. Three alternatives each
ID: 1255603 • Letter: S
Question
Show all formulas and steps using engieering economics. Three alternatives each have a 10 year service life. If the MARR is 10%, which alternative should be selected? Use the following to compare projects….
a). Simple payback period
b). IRR for each project
c). Incremental IRR assessment
d). B/C ratio for each project
e). Incremental B/C ratio assessment
Are any of the projects acceptable? Are any not acceptable? Which project would you recommend and why?
Alternatives: A B C
First Cost $800 $300 $150
Uniform Annual Benefit $142 $60 $33.5
Explanation / Answer
Engineering economics involves formulating, estimating, and evaluating the economic outcomes when alternatives to accomplish a defined purpose are available.
Major topics in engineering industrial economics are:
Company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other projects.
B option is acceptable. Because its first cost is very less($300) and Uniform Annual Benefit is high ($60)