1. A firm is considering two alternatives that have no salvage value. A B Initial Cost $10,700 $5,500 Uniform Annual 2,100 1,800 Benefits Useful Life, in 8 4 years At the end of 4 years, another B may be purchased with the same cost, benefit and so forth. 1. Graph the EUAC or EUAW for the alternatives. Construct a choice table for interest rates from 0% to 100%. 2. If the MARR is 10%, which alternative should be selected?

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
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1. A firm is considering two alternatives that have
no salvage value.
A
Initial Cost
$10,700
$5,500
Uniform Annual
2,100
1,800
Benefits
Useful Life, in
8
4
years
At the end of 4 years, another B may be purchased
with the same cost, benefit and so forth.
1. Graph the EUAC or EUAW for the alternatives.
Construct a choice table for interest rates from
0% to 100%.
2. If the MARR is 10%, which alternative should
be selected?
Transcribed Image Text:1. A firm is considering two alternatives that have no salvage value. A Initial Cost $10,700 $5,500 Uniform Annual 2,100 1,800 Benefits Useful Life, in 8 4 years At the end of 4 years, another B may be purchased with the same cost, benefit and so forth. 1. Graph the EUAC or EUAW for the alternatives. Construct a choice table for interest rates from 0% to 100%. 2. If the MARR is 10%, which alternative should be selected?
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