Show all formulas and steps using engieering economics Three

Show all formulas and steps using engieering economics. Three alternatives each have a 10 year service life. If the MARR is 10%, which alternative should be selected? Use the following to compare projects….

a). Simple payback period

b). IRR for each project

c). Incremental IRR assessment

d). B/C ratio for each project

e). Incremental B/C ratio assessment

Are any of the projects acceptable? Are any not acceptable? Which project would you recommend and why?

Alternatives:                            A                     B                      C

First Cost $800                $300                $150

Uniform Annual Benefit          $142                $60                  $33.5

Solution

Engineering economics involves formulating, estimating, and evaluating the economic outcomes when alternatives to accomplish a defined purpose are available.

Major topics in engineering industrial economics are:

Company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other projects.

B option is acceptable. Because its first cost is very less($300) and   Uniform Annual Benefit is high ($60)