Final Finishing is considering three mutually exclusive alternatives for a new polisher. Each alternative has an expected life of 10 years and no salvage value. Polisher I requires an initial investment of $20,000 and provides annual benefits of $4,465. Polisher II requires an initial investment of $10,000 and provides annual benefits of $1,770. Polisher III requires an initial investment of $15,000 and provides annual benefits of $3,580. MARR is 15%/yr. Based on an internal rate of return analysis, which polisher should be recommended?
Final Finishing is considering three mutually exclusive alternatives for a new polisher. Each alternative has an expected life of 10 years and no salvage value. Polisher I requires an initial investment of $20,000 and provides annual benefits of $4,465. Polisher II requires an initial investment of $10,000 and provides annual benefits of $1,770. Polisher III requires an initial investment of $15,000 and provides annual benefits of $3,580. MARR is 15%/yr. Based on an internal rate of return analysis, which polisher should be recommended?
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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Final Finishing is considering three mutually exclusive alternatives for a new polisher. Each alternative has an expected life of 10 years and no salvage value. Polisher I requires an initial investment of $20,000 and provides annual benefits of $4,465. Polisher II requires an initial investment of $10,000 and provides annual benefits of $1,770. Polisher III requires an initial investment of $15,000 and provides annual benefits of $3,580. MARR is 15%/yr. Based on an
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