Concept A Concept B Concept C Initial investment $85,000,000 S100,000,000 $50,000,000 Net annual savings Salvage (market) value 85,000,000 100,000,000 50,000,000 11,300,000 12,000,000 7,500,000 Useful life 60 years 60 years 40 years
Concept A Concept B Concept C Initial investment $85,000,000 S100,000,000 $50,000,000 Net annual savings Salvage (market) value 85,000,000 100,000,000 50,000,000 11,300,000 12,000,000 7,500,000 Useful life 60 years 60 years 40 years
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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IBM is considering an environmentally conscious green building at one of its new production facilities. The company will decide among three different green designs for the facility, and each of the final mutually exclusive concepts for the facility results in different costs and savings. These three
concepts are summarized below. IBM uses 10% per year as its profitability benchmark (hurdle rate) for such comparisons. Which facility concept should be selected?
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