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

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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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?

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
Transcribed Image Text: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
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