技术经济学英文版演文稿C31.pptVIP

Example 3.6 A company is considering two alternatives to satisfy its photo copying requirements. The cost of each machine is shown below: (a) (b) Initial Cost $10,000 $8,000 Annual Cost $1,000 $1,400 The annual cost includes the replacement and maintenance costs. If both machines have a life of five years and the minimum rate of return (MROR) is 10%, which project should be selected? Solution Both alternatives will perform the same functions, i.e. , they offer the same output. Therefore, our objective should be to minimize the cost. For alternative (a), For alternative (b), Comparing the present worth costs of the two alternatives, alternative (b) should be selected. Example 3.7 A proposal calls for an investment of $100,000 in drilling a new well. It is expected that the production will generate a revenue of $30,000 per year for six years. At the end of six years, the production equipment can be sold for $10,000. Another proposal requires a $100,000 investment. It will generate $50,000 in the first year followed by 8% decline in each year. The life of the project will be six years. There is no salvage value associated with the proposal. If the minimum rate of return is 12%, which project should be selected? Solution We have a fixed amount of investment. Our objective should be to maximize our output or to maximize the present value of benefits received after the fixed investment. For the first proposal, For the second proposal, Comparing the PVbenefits, for both the proposals, the second proposal should be selected. Example 3.8 A company is considering two alternative computer models to satisfy its computer needs. Due to their differing powers, the benefits received by both the computers are different. Based on the work projections, the company thinks that either of the computers can be used to their fullest potential. If the minim