Three proposals are under review for equipment replacement at ACME. ACME uses an MARR of 12.0%...

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Three proposals are under review for equipment replacement atACME. ACME uses an MARR of 12.0% when evaluating the economiccontribution of investments. Data on the cost of each is shownbelow. Answer questions that follow based on this data.
Proposal Investment Amt 1 2 3 4 5
A 440,000 36,000 41,000 42,000 44,000 71,000
B 280,000 82,000 88,000 94,000 100,000 120,000
C 370,000 54,000 58,000 61,000 70,000
90,000
a. Using a rate of return method for analysis, what is the rateof return of the extra investment required to purchase the middlecost proposal in place of the lowest cost proposal?
b. Using a rate of return method for analysis, what is the rateof return of the extra investment required to purchase the highestcost proposal in place of the lowest costproposal?
c. Using a rate of return method for analysis, what is the rateof return of the extra investment required to purchase the highestcost proposal in place of the middle costproposal?
d. Which of the three proposals makes the best economic valuefor ACME provided ACME has the capital to invest?

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3.9 Ratings (663 Votes)

Please see the table below The first column tells you whichpart a b or c is being answered in each line The secondlast See Answer

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Three proposals are under review for equipment replacement atACME. ACME uses an MARR of 12.0% when evaluating the economiccontribution of investments. Data on the cost of each is shownbelow. Answer questions that follow based on this data.ProposalInvestment Amt12345A440,00036,00041,00042,00044,00071,000B280,00082,00088,00094,000100,000120,000C370,00054,00058,00061,00070,00090,000a. Using a rate of return method for analysis, what is the rateof return of the extra investment required to purchase the middlecost proposal in place of the lowest cost proposal?b. Using a rate of return method for analysis, what is the rateof return of the extra investment required to purchase the highestcost proposal in place of the lowest costproposal? c. Using a rate of return method for analysis, what is the rateof return of the extra investment required to purchase the highestcost proposal in place of the middle costproposal? d. Which of the three proposals makes the best economic valuefor ACME provided ACME has the capital to invest?

Proposal	Investment Amt	1	2	3	4	5
A	440,000	36,000	41,000	42,000	44,000	71,000
B	280,000	82,000	88,000	94,000	100,000	120,000
C	370,000	54,000	58,000	61,000	70,000	90,000