Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 8

An estimated 6 billion gallons of clean drinking water disappear each day across the United States due to aging, leaky pipes and water mains before it gets to the consumer or industrial user. The American Society of Civil Engineers (ASCE) has teamed with municipalities, counties, and several excavation companies to develop robots that can travel through mains, detect leaks, and repair many of them immediately. Four proposals have been received for funding. There is a $100 million limit on capital funding, and the MARR is established at 12% per year.
a) Use the IROR method to rank and determine which of the four independent projects should be funded. Solve by spreadsheet, unless instructed to use hand solution.
b) Determine the rate of return for the combination of projects selected in part (a). Is it economically justified
c) Determine the overall rate of return for the $100 million with the projects selected in part
a). Assume that excess funds are invested at the MARR.