Must be solved with excel spreadsheet solving as an npv graph. A. Document the I

Question

Must be solved with excel spreadsheet solving as an npv graph.

A. Document the IRR for each option
B. Evaluate the result at a MARR of 10%
C. Produce the solution as a Choice table

Given a value of MARR at 10%, use incremental analysis to determine which of the following alternatives should be selected (if any). Each has an expected life of ten years. This question must be solved by hand/paper analysis. Plan 1 2 3 4 Null First Cost $220,000 $100,000 $265,000 $180,000 $0 Annual Benefit 39,000 15,000 51,000 26,000 0 Must be solved with excel spreadsheet solving as an npv graph. A. Document the IRR for each option B. Evaluate the result at a MARR of 10% C. Produce the solution as a Choice table

Explanation / Answer

A) IRR:

B)

C) Plan 3 should be selected as the IRR and the NPV for the plan is highest

Year Plan 1 Plan 2 Plan 3 Plan 4 0 -220000 -100000 -26500 -180000 1 39000 15000 51000 26000 2 39000 15000 51000 26000 3 39000 15000 51000 26000 4 39000 15000 51000 26000 5 39000 15000 51000 26000 6 39000 15000 51000 26000 7 39000 15000 51000 26000 8 39000 15000 51000 26000 9 39000 15000 51000 26000 10 39000 15000 51000 26000 IRR 12.04% 8.14% 192.45% 7.31%

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