Final Finishing is considering three mutually exclusive alternatives for a new polisher. Each alternative has an expected life of 10 years and no salvage value. Polisher I requires an initial investment of $20,000 and provides annual benefits of $4,465. Polisher II requires an initial investment of $10,000 and provides annual benefits of $1,770. Polisher III requires an initial investment of $15,000 and provides annual benefits of $3,580. MARR is 15%/yr. Based on an internal rate of return analysis, which polisher should be recommended?

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 2PB: Markoff Products is considering two competing projects, but only one will be selected. Project A...
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Final Finishing is considering three mutually exclusive alternatives for a new polisher. Each alternative has an expected life of 10 years and no salvage value. Polisher I requires an initial investment of $20,000 and provides annual benefits of $4,465. Polisher II requires an initial investment of $10,000 and provides annual benefits of $1,770. Polisher III requires an initial investment of $15,000 and provides annual benefits of $3,580. MARR is 15%/yr. Based on an internal rate of return analysis, which polisher should be recommended?

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