Engineering economicsAlfredo Auto Parts has two options for increasing efficiency. It can expand the current buildingor keep the same building but remodel the inside layout. For a five-year study period, the cashflows for the two options are shown below. Construct a spreadsheet that will calculate thepresent worth for each option with a variable MARR. By trial and error, determine the MARR atwhich the present worths of the two options are equivalentExpansion OptionYear012345Disburse-ments$850 00025 00030 00035 00040 00045 000Net CashFlowReceipts$ 0 - $850 000175 000195 000215 000235 000255 000200 000225 000250 000275 000300 000Remodelling OptionDisburse-ments$230 000900011 70015 21019 77325 705Net CashFlowReceipts$ 0 - $230 00080 00071 00080 00068 30080 00064 79080 00060 22780 00054 295

By trial and error, the MARR at which the NPV is equal for both options is 6.29%

Answered: Alfredo Auto Parts has two options for…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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