1. Three mutually exclusive investment alternatives are being considered. The estimated cash flows for each alternative are tabulated in the accompanying table. The firm's MARR is 20% per year. Make a recommendation given that: a) the study period is 30 years, repeatability may be assumed. (AW) b) the study period is 10 years, repeatability may not be assumed. (FW) c) the study period is 5 years, repeatability may not be assumed. (IRR) Alternative 1 Alternative 2 Alternative 3 $ 30,000 $ 16,000 $ 24,000 $ 60,000 $ 30,000 $ 49,500 $ 40,000 $ 25,000 $ 34,000 Capital Investment Annual Costs Annual Revenues Useful Life (years) 5 5 6. Salvage Value $ 10,000 $ 10,000 $ 10,000

1. Three mutually exclusive investment alternatives are being considered. The estimated cash flows for each alternative are tabulated in the accompanying table. The firm's MARR is 20% per year. Make a recommendation given that: a) the study period is 30 years, repeatability may be assumed. (AW) b) the study period is 10 years, repeatability may not be assumed. (FW) c) the study period is 5 years, repeatability may not be assumed. (IRR) Alternative 1 Alternative 2 Alternative 3 $ 30,000 $ 16,000 $ 24,000 $ 60,000 $ 30,000 $ 49,500 $ 40,000 $ 25,000 $ 34,000 Capital Investment Annual Costs Annual Revenues Useful Life (years) 5 5 6. Salvage Value $ 10,000 $ 10,000 $ 10,000

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter23: Corporate Restructuring

Section: Chapter Questions

Problem 10P

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