Mutually Exclusive Alternative II IV Capital investment Annual revenues less expenses Market value (end of useful life) Useful life (years) $100,000 $152,000 $184,000 $220,000 41,500 20,000 15,200 10,000 35,900 15,000 31,900 12 12 12 12
Mutually Exclusive Alternative II IV Capital investment Annual revenues less expenses Market value (end of useful life) Useful life (years) $100,000 $152,000 $184,000 $220,000 41,500 20,000 15,200 10,000 35,900 15,000 31,900 12 12 12 12
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Four mutually exclusive alternatives are being evaluated, and their costs and revenues are itemized below. Solve, a. If the MARR is 15% per year and the analysis period is 12 years, use the PW method to determine which alternatives are economically acceptable and which one should be selected. b. If the total capital investment budget available is $200,000, which alternative should be selected? c. Which rule applies? Why?
Transcribed Image Text:Mutually Exclusive Alternative
II
IV
Capital investment
Annual revenues less expenses
Market value (end of useful life)
Useful life (years)
$100,000 $152,000 $184,000 $220,000
41,500
20,000
15,200
10,000
35,900
15,000
31,900
12
12
12
12
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