Problem 3 Given cash flows for two alternatives as shown in table below, choose

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Problem 3
Given cash flows for two alternatives as shown in table below, choose the most attractive
alternative if MARR = 8%.
A. Select Alt. B B. Select Alt. A C. Select neither D. Select either

Problem 4
The incremental cash flow between two alternatives is shown below.
Year Incremental Cash Flow
0 -$20,000
1 through 10 +$3,000
10 +$400
The equation(s) that can be used to correctly solve for the incremental rate of return is (are):
A. 0 = -20,000 + 3000 (P/A, i, 10) + 400 (P/F, i, 10)
B. 0 = -20,000 (A/P, i, 10) + 3000 + 400 (A/F, i, 10)
C. 0 = -20,000 (F/P, i, 10) + 3000 (F/A, i, 10) + 400
D. All of the above

Problem 5
Two alternatives are being considered:
A B
Initial Cost $9200 $5000
Uniform annual benefit 1850 1750
Useful life, in years 8 4
If the MARR is 7% and identical replacement is assumed, which alternative should be selected?
A. Select Alt. B B. Select Alt. A C. Select neither D. Select either

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