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A company must install one of two systems to reduce costs. Both systems have useful lives of 5 years and no selvage value. The cash flows are summarized below. 4 5 IRR Year System A NCF, $ System C NCF, $ 0 -10,000 -13,500 3,000 3,000 3,000 3,500 3,000 4,000 3,000 4,500 3,000 5,000 3 2 1 15.2% 13.4%

A company must install one of two systems to reduce costs. Both systems have useful lives of 5 years and no selvage value. The cash flows are summarized below. 4 5 IRR Year System A NCF, $ System C NCF, $ 0 -10,000 -13,500 3,000 3,000 3,000 3,500 3,000 4,000 3,000 4,500 3,000 5,000 3 2 1 15.2% 13.4%

Essentials Of Investments
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
Section: Chapter Questions
Problem 1PS
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Not enough information to decide Neither System A or C O System A System C Either System A or C
Transcribed Image Text:Not enough information to decide Neither System A or C O System A System C Either System A or C
st A company must install one of two systems to reduce costs. Both systems have useful lives of 5 years and no selvage value. The cash flows are summarized below. 5 IRR Year System A NCF, $ System C NCF, $ 0 -10,000 -13,500 3,000 3,000 3,000 3,500 3,000 4,000 3,000 4,500 3,000 5,000 3 1 2 15.2% 13.4% Assume the firm's MARR is 10%. Which project should be selected on the basis of the IRR criterion?
Transcribed Image Text:st A company must install one of two systems to reduce costs. Both systems have useful lives of 5 years and no selvage value. The cash flows are summarized below. 5 IRR Year System A NCF, $ System C NCF, $ 0 -10,000 -13,500 3,000 3,000 3,000 3,500 3,000 4,000 3,000 4,500 3,000 5,000 3 1 2 15.2% 13.4% Assume the firm's MARR is 10%. Which project should be selected on the basis of the IRR criterion?
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