Fantastic Footwear can invest in one of two different automated clicker cutters. The first, A, has a $110,000 first cost. A similar one with many extra features, B has a $602,000 first cost. A will save $50,000 per year over the cutter currently in use. B will save $170,000 per year. Each clicker cutter will last five years. If the MARR is 8 percent, which alternative is better? Use an IRR comparison. percent. For the increment from cutter A to For the increment from the do-nothing alternative to cutter A, the IRR is cutter B, the IRR is percent. Therefore, should be chosen. (Type integers or decimals rounded to one decimal place as needed.)
Fantastic Footwear can invest in one of two different automated clicker cutters. The first, A, has a $110,000 first cost. A similar one with many extra features, B has a $602,000 first cost. A will save $50,000 per year over the cutter currently in use. B will save $170,000 per year. Each clicker cutter will last five years. If the MARR is 8 percent, which alternative is better? Use an IRR comparison. percent. For the increment from cutter A to For the increment from the do-nothing alternative to cutter A, the IRR is cutter B, the IRR is percent. Therefore, should be chosen. (Type integers or decimals rounded to one decimal place as needed.)
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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Transcribed Image Text:Fantastic Footwear can invest in one of two different automated clicker cutters. The first, A, has a $110,000 first cost. A
similar one with many extra features, B has a $602,000 first cost. A will save $50,000 per year over the cutter currently in
use. B will save $170,000 per year. Each clicker cutter will last five years. If the MARR is 8 percent, which alternative is
better? Use an IRR comparison.
For the increment from the do-nothing alternative to cutter A, the IRR is
cutter B, the IRR is percent. Therefore,
should be chosen.
(Type integers or decimals rounded to one decimal place as needed.)
percent. For the increment from cutter A to
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