Alternative 1 Alternative 2 Investment cost $3,000 $X Annual receipts less expenses Salvage value Useful life 800 1,300 2,000 4,000 5 years 7 years

Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter1: Accounting And The Financial Statements
Section: Chapter Questions
Problem 58APSA
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What is the investment cost of Alternative 2 that will cause it to breakeven with Alternative 1, assuming the MARR = 12% per year. Further assume cotermination at the end of year five. State any other assumptions you make.

Alternative 1 Alternative 2
Investment cost
$3,000
$X
Annual receipts
less expenses
Salvage value
Useful life
800
1,300
2,000
4,000
5 years
7 years
Transcribed Image Text:Alternative 1 Alternative 2 Investment cost $3,000 $X Annual receipts less expenses Salvage value Useful life 800 1,300 2,000 4,000 5 years 7 years
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