6. David is opening an Aerial Adventure Park. He has three mutually exclusive design alternatives: Capital investment Annual receipts Annual expenses Design A $175,000 $115,000 $70,000 Design B $350,000 $150,000 $80,000 Design C $300,000 $125,000 $70,000 Market values are negligible. A 10-year study period is to be used and the MARR is 10% per year. Use the FW Method to determine which alternative should be chosen.

6. David is opening an Aerial Adventure Park. He has three mutually exclusive design alternatives: Capital investment Annual receipts Annual expenses Design A $175,000 $115,000 $70,000 Design B $350,000 $150,000 $80,000 Design C $300,000 $125,000 $70,000 Market values are negligible. A 10-year study period is to be used and the MARR is 10% per year. Use the FW Method to determine which alternative should be chosen.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section10.A: Mutually Exclusive Investments Having Unequal Lives

Problem 2P

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