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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
6.30Â Â Â Five revenue projects are under consideration by General Dynamics for improving material flow thorough an assembly line. The initial cost (in $ thousands) and life of each project are estimated. Revenue estimates are not known at this point.
Â
Â
Â
Â
|
Initial cost, $ |
-700 |
-2300 |
-900 |
-300 |
-1600 |
|
Life, yrs. |
5 |
8 |
5 |
5 |
6 |
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An engineer made the comparisons shown below. From the calculations, determine which project, if any, should be undertaken, if the company’s MARR is (a) 11.5% per year, and (b) 13.5% per year. If other calculations must be made in order to make a decision, state which ones.
Â
|
Comparison |
Incremental Rate of Return, Â % |
|
B vs. DN |
13 |
|
A vs. B |
19 |
|
D vs. DN |
11 |
|
E vs. B |
15 |
|
E vs. D |
24 |
|
E vs. A |
21 |
|
C vs. DN |
7 |
|
C vs. A |
19 |
|
E vs. DN |
12 |
|
A vs. DN |
10 |
|
E vs. C |
33 |
|
D vs. C |
33 |
D vs. BÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 29
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estimated, and all machines are expected to have a                                                                                                Â
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