CB Electronix must buy a piece of equipment to place electronic components on the printed circuit boards it assembles. The proposed equipment has a 10-year life with no scrap value. The supplier has given CB several purchase alternatives. The first is to purchase the equipment for $750,000. The second is to pay for the equipment in 10 equal installments of $125,000 each, starting one year from now. The third is to pay $170,000 now and $90,000 at the end of each year for the next 10 years. Complete parts (a) and (b) below. a. Which alternative should CB choose if its MARR is 11 percent per year? Use an IRR comparison approach. Considering the alternatives in the order of lowest first cost, the best option is the (Type an integer or decimal rounded to two decimal places as needed. Use an api which has an incremental rate of return of %. not be used.) first option, second option, do-nothing option, third option,
CB Electronix must buy a piece of equipment to place electronic components on the printed circuit boards it assembles. The proposed equipment has a 10-year life with no scrap value. The supplier has given CB several purchase alternatives. The first is to purchase the equipment for $750,000. The second is to pay for the equipment in 10 equal installments of $125,000 each, starting one year from now. The third is to pay $170,000 now and $90,000 at the end of each year for the next 10 years. Complete parts (a) and (b) below. a. Which alternative should CB choose if its MARR is 11 percent per year? Use an IRR comparison approach. Considering the alternatives in the order of lowest first cost, the best option is the (Type an integer or decimal rounded to two decimal places as needed. Use an api which has an incremental rate of return of %. not be used.) first option, second option, do-nothing option, third option,
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Transcribed Image Text:CB Electronix must buy a piece of equipment to place electronic components on the printed circuit boards it assembles. The proposed equipment has a 10-year life
with no scrap value. The supplier has given CB several purchase alternatives. The first is to purchase the equipment for $750,000. The second is to pay for the
equipment in 10 equal installments of $125,000 each, starting one year from now. The third is to pay $170,000 now and $90,000 at the end of each year for the next
10 years. Complete parts (a) and (b) below.
a. Which alternative should CB choose if its MARR is 11 percent per year? Use an IRR comparison approach.
Considering the alternatives in the order of lowest first cost, the best option is the
(Type an integer or decimal rounded to two decimal places as needed. Use an api
which has an incremental rate of return of %.
not be used.)
first option,
second option,
do-nothing option,
third option,
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