Question

Data for four mutually exclusive alternatives are given in the table below. Assume a life of 7 years and a MARR of ( 9 % ), Reference: Table 9 The ) ratio for the first increase?

Answer 1

The information provided lacks specific data for the alternatives and their corresponding performance metrics. To calculate the Incremental Benefit-Cost (I/BC) ratio, precise numerical values for costs, benefits, and duration are required.

Step-by-step explanation:

The Incremental Benefit-Cost (I/BC) ratio is a financial metric used to evaluate the attractiveness of mutually exclusive alternatives by comparing the incremental benefits and costs. To calculate the I/BC ratio, you need to subtract the costs of the current alternative from the costs of the next alternative to find the incremental cost. Similarly, subtract the benefits of the current alternative from the benefits of the next alternative to find the incremental benefits. The I/BC ratio is then calculated by dividing the incremental benefits by the incremental costs.

Given the absence of specific data, it's not possible to perform the calculations. However, assuming you have the necessary information for the costs and benefits of each alternative, you can use the formula:

`\[ I/BC \text{ ratio} = \frac{\text{Incremental Benefits}}{\text{Incremental Costs}} \]`

Once the I/BC ratio is calculated, it can be compared to a predetermined MARR (Minimum Acceptable Rate of Return). If the I/BC ratio is greater than the MARR, the project is considered economically viable. This approach aids in selecting the most financially sound alternative among the given options.

Complete Question: Data for four mutually exclusive alternatives are given in the table below. Assume a life of 7 years and a MARR of ( 9 % ), Reference: Table 9 The ) ratio for the first increase?