A company is considering six different alternatives for purchasing a new machine for their manufacturing process. The following table shows the relevant information for each alternative: First Alternative Cost A B C D E F Salvage Life Value Span (USD) Cost (USD) (USD) (years) Annual Operating 50,000 10,000 75,000 8,000 100,000 6,000 120,000 5,000 150,000 4,000 200,000 3,000 20,000 5 30,000 6 40,000 10 60,000 12 70,000 15 80,000 20 Assuming a MARR of 8%, calculate the incremental rate of return and determine the design alternative the company should select. You can to use Excel to solve this problem. You can skip the calculate i" (vs. DN) and eliminate all with i' < MARR Step as it will result in numerous NUM! errors.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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A company is considering six different
alternatives for purchasing a new machine for their
manufacturing process. The following table shows
the relevant information for each alternative:
First
Alternative Cost
(USD)
A
B
с
D
E
F
Annual
Salvage Life
Operating Value Span
Cost (USD) (USD)
(years)
50,000 10,000
75,000 8,000
100,000 6,000
120,000 5,000
150,000 4,000
200,000 3,000
20,000 5
30,000 6
40,000 10
60,000 12
70,000 15
80,000 20
Assuming a MARR of 8%, calculate the incremental
rate of return and determine the design alternative
the company should select. You can to use Excel to
solve this problem. You can skip the calculate i* (vs.
DN) and eliminate all with i < MARR Step as it will
result in numerous NUM! errors.
Transcribed Image Text:A company is considering six different alternatives for purchasing a new machine for their manufacturing process. The following table shows the relevant information for each alternative: First Alternative Cost (USD) A B с D E F Annual Salvage Life Operating Value Span Cost (USD) (USD) (years) 50,000 10,000 75,000 8,000 100,000 6,000 120,000 5,000 150,000 4,000 200,000 3,000 20,000 5 30,000 6 40,000 10 60,000 12 70,000 15 80,000 20 Assuming a MARR of 8%, calculate the incremental rate of return and determine the design alternative the company should select. You can to use Excel to solve this problem. You can skip the calculate i* (vs. DN) and eliminate all with i < MARR Step as it will result in numerous NUM! errors.
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