---
title: "Repeatability comparison of projects A and B"
subject: "Engineering Economics"
chapter: 4
key: "semester_6/engineering_economics:repeatability-a-b-200000-300000"
source: https://www.bctengineer.com/q/semester_6/engineering_economics/repeatability-a-b-200000-300000
site: BCT Engineering
---

# Repeatability comparison of projects A and B

Engineering Economics · Chapter 4: Comparative Analysis of Alternatives

- Asked in: 2070 Magh, 4 marks
- Video: [Repeatability assumption |Economics |Board Exam Solution in NEPALI](https://www.youtube.com/watch?v=OfLkWltuILI) — OPengineer
- Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14
- Page: https://www.bctengineer.com/q/semester_6/engineering_economics/repeatability-a-b-200000-300000
- Whole chapter: https://www.bctengineer.com/md/semester_6/engineering_economics/chapter-4

## Question

Compare the following projects by using repeatability assumption when MARR is 12%.
| Project | A | B |
|---|---|---|
| Initial investment | 2,00,000 | 3,00,000 |
| Annual revenue | 25,000 | 30,000 |
| Annual costs | 7,000 | 9,000 |
| Useful life, year | 6 | 8 |
| Salvage value | 10,000 | 20,000 |

## Short answer

Repeatability at 12% MARR: AW(A) = -Rs. 29,413/yr, AW(B) = -Rs. 37,765/yr. Both negative (neither meets MARR). Project A has less negative AW; select A if forced to choose.

## Answer

Repeatability assumption: each project can be repeated indefinitely with the same cash flows, so the comparison is made on annual worth (AW) of one life cycle. MARR = 12%.

AW = -I(A/P, 12%, N) + (Revenue - Cost) + S(A/F, 12%, N)

#### Project A (N = 6)
(A/P, 12%, 6) = 0.2432, (A/F, 12%, 6) = 0.1232
AW(A) = -200,000(0.2432) + (25,000 - 7,000) + 10,000(0.1232)
      = -48,645 + 18,000 + 1,232 = **Rs. -29,413**

#### Project B (N = 8)
(A/P, 12%, 8) = 0.2013, (A/F, 12%, 8) = 0.0813
AW(B) = -300,000(0.2013) + (30,000 - 9,000) + 20,000(0.0813)
      = -60,391 + 21,000 + 1,626 = **Rs. -37,765**

| Project | Life | AW (Rs./yr) |
|---|---|---|
| A | 6 | -29,413 |
| B | 8 | -37,765 |

**Answer: Select Project A**, it has the larger (less negative) annual worth (-29,413 against -37,765). Both AWs are negative, so neither earns the MARR of 12%; if doing nothing is allowed, neither should be taken.

## Check yourself

The answer's key points as multiple-choice questions, with the correct option and why.

1. What is compared under repeatability?
   A. Payback
   B. AW of one life cycle
   C. IRR
   D. PW over 6 years only
   Answer: B. With indefinite repeat, AW over one cycle is representative. (Key point: Method)

2. What AWs result?
   A. A -37,765; B -29,413
   B. Both positive
   C. A 29,413; B 37,765
   D. A -29,413; B -37,765
   Answer: D. Computed with 12% factors. (Key point: AW values)

3. What decision is reached?
   A. Select B
   B. Select both
   C. Select B since higher salvage
   D. Select A (less negative AW); neither earns 12%
   Answer: D. A is less negative, but both are negative so doing nothing would be better if allowed. (Key point: Decision)

## Related in Engineering Economics

- [Sensitivity to investment, revenue and life](https://www.bctengineer.com/question.md?key=semester_6%2Fengineering_economics%3Asensitivity-30-investment-revenue-life-500000) — Engineering Economics, chapter 6
- [Repeatability assumption, select best of three projects](https://www.bctengineer.com/question.md?key=semester_6%2Fengineering_economics%3Arepeatability-abc-14) — Engineering Economics, chapter 4, asked 2×
- [Sensitivity on investment, revenue and life; interpret](https://www.bctengineer.com/question.md?key=semester_6%2Fengineering_economics%3Asensitivity-30-initial-100000-useful-10) — Engineering Economics, chapter 6
- [Repeatability, 4-year study, infinite life](https://www.bctengineer.com/question.md?key=semester_6%2Fengineering_economics%3Aselect-best-repeatability-study-infinite) — Engineering Economics, chapter 4
- [Best of three mutually exclusive projects, 10-year study](https://www.bctengineer.com/question.md?key=semester_6%2Fengineering_economics%3Amutually-exclusive-abc-study-10-years) — Engineering Economics, chapter 4
- [PW sensitivity to investment, income, life by ±25%](https://www.bctengineer.com/question.md?key=semester_6%2Fengineering_economics%3Asensitivity-pw-400000-60000-25) — Engineering Economics, chapter 6

## Related in other subjects

- [EPS and book value; ABC project Rs 6,00,000](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Aeps-bv-abc-project-600000-b79) — Project Engineering, chapter 6
- [EVA; 60 days, 25% work, Rs 12,00,000](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Aeva-numerical-60-days-25-percent) — Project Engineering, chapter 4
- [EPS and book value; Rs 10,00,000, 3500 shares](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Aeps-bv-capital-1000000-3500-shares) — Project Engineering, chapter 6
- [Feasibility using two methods, MARR 15%](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Afeasibility-two-methods-marr-15) — Project Engineering, chapter 6