B/C analysis

Problem 1: Consider two alternatives below. Use B/C analysis to answer 1) Which option is a viable option (Option A, Option B or both) and 2) provide a choice between two options. Include cash flow diagram, calculations and words to make your conclusion. Option 1 Option 2 Initial Cost $4,500 $6,000 Annual Revenue $1,600 $1,850 Annual Expense $400 $500 Salvage $800 $1,200 Useful life & interest rate 8 years & 15% 10 years & 15% Problem 2: Using MARR = 9%, determine IROR, and make your recommendation on which option to choose. Useful life of both options is 3 years. Draw all three (3) cash flow diagram to receive full credit. Option A Option B Initial Cost $100 $140 Cost at Yr 3 $100 $0 Problem 3: If you borrowed $100 for I = 6% and payback is $25/year, determine the pay back period. Show all steps on how you derived to the answer. Problem 4: Determine if the breakeven annual revenue is a viable option. Be sure to explain in words your reasoning. Initial cost: $30k Annual O&M: $500/yr Salvage: $100 Annual Revenue: $2.5k/yr Life Span: 24 years i = 2% Problem 5: A new Corporate bond was initially sold by a stockholder to an investor for $950. The issuing corporation promised to pay the bondholder $40 interest every 6 months and $1,000 will be repaid at the end of 9 years. What is rate of return, nominal interest rate and effective interest rate.