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A large local government is considering four different alternatives of a water supply project. These are mutually exclusive projects and one must be selected. The type of equipment and technology needed are quite different in each case. The table summarizes the economic aspects of the project.

Alt1 Alt. 2 Alt. 3 Alt. 4

Equipment costs $597,500 $446,100 $435,700 $249,800

Installation costs 150,000 150,000 200,000 100,000

Expected annual benefit 50,000 35,000 45,000 18,000

Question: The MARR is 8%. Assume the projects’ lives will be 30 years. Use incremental B/C analysis to determine the preferred alternative.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M92195334

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