| Question |
Five revenue projects are under consideration by General Dynamics for improving material flow through an assembly line. The initial cost in $1000 and the life of each project are as follows (revenue estimates are not shown): An engineer made the comparisons shown below. From the calculations, determine which project, if any, should be undertaken if the company’s is (a) 11.5% per year (b) 13.5% per year. If other calculations are necessary to make a decision, state which ones. Comparison Incremental Rate of Return, % B vs DN …………13% A vs B …………19% D vs DN …………11% E vs B ………….15% E vs D ………….24% E vs A ………….21% C vs DN ………… 7% C vs A …………19% E vs DN …………12% A vs DN …………10% E vs C ………….33% D vs C ………….33% D vs B………….29% |
