10. Five revenue projects are under consideration by El Paso Garment for improvi

Question

10. Five revenue projects are under consideration by El Paso Garment for improving the material flow through an assembly line. The initial cost of each project is shown below (annual income and costs not shown). PROJECT 7,000 16,000 9,000 3,000 23,000 Initial cost,S Life, yrs From the calculations shown below, determine which project if any, should be undertaken. The company's MARR is 14% per year. If other calculations must be made in order to make a decision, select DN Incremental rate of return 13% E vs DN A vs E D vs DN B vs E B vs D B vs A C vs DN C vs A B vs DN A vs DN B vs C D vs C D vs E 1 1% 15% 24% 21% 7% 19% 10% 33% 3390 29% (a) Select DN (b) Select Project B (c) Select Project C (d) Select Project D (e) Select Project E

Explanation / Answer

Projects MARR is 14%. So investor should choose project which has return more than 14%. Incremental rerturn of Project B over project C is 33%, over project A 21% over project D is 24% and E is 15%.

Since, increemetal return of project B over all other four project is highest. So, project B should be accepted.

Option (B) is correct answer.

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.