Three mutually exclusive design alternatives are being considered. The estimated cash flows for each alternative are given next. The MARR is 20% per year. At the end of the useful life, the investment will be sold A B Capital Investment $28,000 $55,000 $40,000 Annual 15,000 13,000 22,000 Expenses Annual 23,000 28,000 32,000 Revenues MV at EOY 10 Useful life 6,000 10 years 8,000 10,000 10 years 10 years Evaluate all alternatives using PW & IRR method and determine which alternative is preferable.
Three mutually exclusive design alternatives are being considered. The estimated cash flows for each alternative are given next. The MARR is 20% per year. At the end of the useful life, the investment will be sold A B Capital Investment $28,000 $55,000 $40,000 Annual 15,000 13,000 22,000 Expenses Annual 23,000 28,000 32,000 Revenues MV at EOY 10 Useful life 6,000 10 years 8,000 10,000 10 years 10 years Evaluate all alternatives using PW & IRR method and determine which alternative is preferable.
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 27P
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