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

Essentials Of Investments
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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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Use a Compound interest table instead of the formula. Also please only Solve PART B.

Please solve by hand and DO NOT USE Excel.

 

 

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