Sam is buying a refrigerator. He has two choices. A used one, at $475, should last him about three years. A new one, at $1225, would likely last eight years. Both have a scrap value of zero. Use an IRR analysis to determine which of the two alternatives is best. The MARR is 8 percent. Use the repeated lives method to deal with the unequal service lives of the two alternatives. Considering the alternatives in the order of lowest first cost, the best option is ▼which has an incremental rate of return of %. (Type an integer or decimal rounded to two decimal places as needed. Use an approximate ERR if the IRR cannot be used.)

Sam is buying a refrigerator. He has two choices. A used one, at $475, should last him about three years. A new one, at $1225, would likely last eight years. Both have a scrap value of zero. Use an IRR analysis to determine which of the two alternatives is best. The MARR is 8 percent. Use the repeated lives method to deal with the unequal service lives of the two alternatives. Considering the alternatives in the order of lowest first cost, the best option is ▼which has an incremental rate of return of %. (Type an integer or decimal rounded to two decimal places as needed. Use an approximate ERR if the IRR cannot be used.)

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter15: Decision Analysis

Section: Chapter Questions

Problem 20P: Alexander Industries is considering purchasing an insurance policy for its new office building in...

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