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Question 2 (13 points) A mining industrialist has to decide between two investment opportunities, summarized in the table below. The industrialist's annual MARR is 10% (The cash-flows are in thousands of dollars). Initial Cost Annual Revenues Annual Costs Project life (years) Salvage Value Investment A Investment B $4,000 $8,000 $2,000 $2,500 $600 $400 20 10 1,000 2,000 (a) Based on the information provided and using the PW method, which investment is more economical? Report the PW values and justify your selection. (b) Calculate the benefit/cost (B/C) ratio of the more economical alternative only. Clearly state the definition of B/C used (i.e., whether modified or conventional) Answers to Qu. 2 (No points will be earned for answer spaces let blank. Full credit will be given only if all the necessary steps are clearly shown in the calculations and the answer is correct) (a) (b) Calculations (use both sides of the paper if more space needed)

          Question 2 (13 points)
A mining industrialist has to decide between two investment opportunities, summarized in the table below. The
industrialist's annual MARR is 10% (The cash-flows are in thousands of dollars).
Initial Cost
Annual Revenues
Annual Costs
Project life (years)
Salvage Value
Investment A
Investment B
$4,000
$8,000
$2,000
$2,500
$600
$400
20
10
1,000
2,000
(a) Based on the information provided and using the PW method, which investment is more economical? Report
the PW values and justify your selection.
(b) Calculate the benefit/cost (B/C) ratio of the more economical alternative only. Clearly state the definition of
B/C used (i.e., whether modified or conventional)
Answers to Qu. 2 (No points will be earned for answer spaces let blank. Full credit will be given only if all the
necessary steps are clearly shown in the calculations and the answer is correct)
(a)
(b)
Calculations (use both sides of the paper if more space needed)

Question 2 (13 points)
A mining industrialist has to decide between two investment opportunities, summarized in the table below. The
industrialist's annual MARR is 10% (The cash-flows are in thousands of dollars).
Initial Cost
Annual Revenues
Annual Costs
Project life (years)
Salvage Value
Investment A
Investment B
4,0008,000
2,0002,500
600400
20
10
1,000
2,000
(a) Based on the information provided and using the PW method, which investment is more economical? Report
the PW values and justify your selection.
(b) Calculate the benefit/cost (B/C) ratio of the more economical alternative only. Clearly state the definition of
B/C used (i.e., whether modified or conventional)
Answers to Qu. 2 (No points will be earned for answer spaces let blank. Full credit will be given only if all the
necessary steps are clearly shown in the calculations and the answer is correct)
(a)
(b)
Calculations (use both sides of the paper if more space needed)

Added by Ricky R.

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