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3. Two mutually exclusive alternatives are being considered for the environmental protection equipment at a petroleum refinery. One of these alternatives must be selected. The estimated cash flows for each alternative are as follows: Capital investment Annual expenses Market value at end of useful life Useful life Alternative A Alternative B $20,000 $38,000 5,500 4,000 1,000 4,200 5 years 10 years a. Which environmental protection equipment alternative should be selected? The firm's MARR is 20% per year. Assume the equipment will be needed indefinitely. b. Assume the study period is shortened to five years. The market value of Alternative B after five years is estimated to be $15,000. Which alternative would you recommend?

3. Two mutually exclusive alternatives are being considered for the environmental protection equipment at a petroleum refinery. One of these alternatives must be selected. The estimated cash flows for each alternative are as follows: Capital investment Annual expenses Market value at end of useful life Useful life Alternative A Alternative B $20,000 $38,000 5,500 4,000 1,000 4,200 5 years 10 years a. Which environmental protection equipment alternative should be selected? The firm's MARR is 20% per year. Assume the equipment will be needed indefinitely. b. Assume the study period is shortened to five years. The market value of Alternative B after five years is estimated to be $15,000. Which alternative would you recommend?

Introductory Circuit Analysis (13th Edition)
Introductory Circuit Analysis (13th Edition)
13th Edition
ISBN:9780133923605
Author:Robert L. Boylestad
Publisher:Robert L. Boylestad
Chapter1: Introduction
Section: Chapter Questions
Problem 1P: Visit your local library (at school or home) and describe the extent to which it provides literature...
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Two mutually exclusive alternatives are being considered for the environmental protection equipment at a petroleum refinery. One of these alternatives must be selected. The estimated cash flows for each alternative are as follows: | | Alternative A | Alternative B | |-------------------------|---------------|---------------| | Capital investment | $20,000 | $38,000 | | Annual expenses | $5,500 | $4,000 | | Market value at end of useful life | $1,000 | $4,200 | | Useful life | 5 years | 10 years | a. Which environmental protection equipment alternative should be selected? The firm’s MARR is 20% per year. Assume the equipment will be needed indefinitely. b. Assume the study period is shortened to five years. The market value of Alternative B after five years is estimated to be $15,000. Which alternative would you recommend?
Transcribed Image Text:Two mutually exclusive alternatives are being considered for the environmental protection equipment at a petroleum refinery. One of these alternatives must be selected. The estimated cash flows for each alternative are as follows: | | Alternative A | Alternative B | |-------------------------|---------------|---------------| | Capital investment | $20,000 | $38,000 | | Annual expenses | $5,500 | $4,000 | | Market value at end of useful life | $1,000 | $4,200 | | Useful life | 5 years | 10 years | a. Which environmental protection equipment alternative should be selected? The firm’s MARR is 20% per year. Assume the equipment will be needed indefinitely. b. Assume the study period is shortened to five years. The market value of Alternative B after five years is estimated to be $15,000. Which alternative would you recommend?
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