2.) 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 conclusion of the useful life, the investment will be sold a. Evaluate all alternatives using PW method and determine which alternative is preferable. b. Use incremental analysis to determine the best alternative. Capital Investment Annual Expense Annual Revenue A $28,000 $15,000 $23,000 $6,000 В $55,000 $13,000 $28,000 $8,000 C $85,000 $22,000 $42,000 Salvage Value $10,000 Useful life 10 10 10
2.) 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 conclusion of the useful life, the investment will be sold a. Evaluate all alternatives using PW method and determine which alternative is preferable. b. Use incremental analysis to determine the best alternative. Capital Investment Annual Expense Annual Revenue A $28,000 $15,000 $23,000 $6,000 В $55,000 $13,000 $28,000 $8,000 C $85,000 $22,000 $42,000 Salvage Value $10,000 Useful life 10 10 10
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:2.) 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
conclusion of the useful life, the investment will be sold
a. Evaluate all alternatives using PW method and determine which alternative is
preferable.
b. Use incremental analysis to determine the best alternative.
Capital Investment
Annual Expense
Annual Revenue
A
$28,000
$15,000
$23,000
$6,000
B
$55,000
$13,000
$28,000
$8,000
C
$85,000
$22,000
$42,000
Salvage Value
$10,000
Useful life
10
10
10
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