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Tutorial 10

Both alternatives presented are acceptable options based on their benefit-cost ratios. An incremental analysis is required to determine which alternative should be chosen. For the first project, Alternative B has a benefit-cost ratio of 1.2041 while Alternative C's ratio is 1.1574. For the second project comparing design options, the Verizon design has a higher benefit-cost ratio of 2.4283 compared to 1.4843 for the cellgene design. Therefore, the Verizon design is selected.

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Alvin Tan
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19 views

Tutorial 10

Both alternatives presented are acceptable options based on their benefit-cost ratios. An incremental analysis is required to determine which alternative should be chosen. For the first project, Alternative B has a benefit-cost ratio of 1.2041 while Alternative C's ratio is 1.1574. For the second project comparing design options, the Verizon design has a higher benefit-cost ratio of 2.4283 compared to 1.4843 for the cellgene design. Therefore, the Verizon design is selected.

Uploaded by

Alvin Tan
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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10

13Alternativett
Capital investment 20000k
Annual power sales 1000k per year
0AM costs i Look peryear
benefit 500k per
year

Alternative
Capitol investment 30000k
Annual power sales 800k per year
0km costs look per year
Benefit GOO t Joo t lov t 4003k 1300k
i 5 H 50 years

The conventional B c ratio for alternativACusing An method


B C l 0kt5 15000 I I57431
20000k Afp 540,50 1200k Jo ooo Ko 0548 1 Look

Alternatively
B C 80014130 22160 l 2041

30000k Alp15 tool 30 o ok 00548 1look


Both alternates are acceptable An incremental analysis is required to
determine which alternative should be chosen

OCB A using Aw method

capital investment 10000k


Annul
I
Annual 0dmcost look
0 Other Annul benefit 800k
200kt 800k
10000k Alp 5 50 100k 10000k 0.0548 look
L 339371
Alternative 13 is selected

city's cost of capital is 10 per year

Vcrigene
initial investmentCtirstcost Nik 175k
useful life in years
O 12
MV at the end d useful life 90k 37.5k
Annual benefits from operation 28 8k 38.8k
t.hn 9 Sk Il 3k

eagexpmusUsingAwmethodB

CCmodified Aw B Awc
CR
ForVerion
B C Cmodified 28.8k sk9
5kCAlp l04o b 2okLApylo4y6

75140.2296 201401296
1.2989
Forcellgonei
B modified 38 sk
175kCA p 10 12 37.5CAle 10 12
27.5k
1751401468 37 50.0468
L 148431
Both are acceptable thus an incremental analysis is required to determine
which design should be selected

Awhosts Verizon 75k Alp 10 6 20k AIR Who 6 t 9.8k


75140.2296 20kt o 1246 998k
2e 428
Art costs cellgene 175k Alp 10 12 37.5ktAlf 10
ly 111.73k
175140.1468 37 tk Co 0468 111 3k
35235
B c Verizon 288kg I 17h021 acceptable
24 he28

81310C of cellgene Verizon 238 sec I8 rk O grass 9 I


35235 29428

Design verizon is selected

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