Three mutually exclusive earth-moving pieces of equipment are being considered for several large building projects in India over the next five years. The estimated cash flows for each alternative are given below. The construction company's MARR is 12% per year. Which of the three alternatives, if any, should be adopted? Assume repeatability is appropriate for this comparison. Caterpillar Deere Case Capital investment Net annual revenue $22,000 $6,500 $26,400 $16,000 $10,000 $5,200 Salvage value $4,500 $4,500 $3,750 Useful life 4 years 3 years 5 years

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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Three mutually exclusive earth-moving pieces of equipment are being considered for several large building projects in India
over the next five years. The estimated cash flows for each alternative are given below. The construction company's MARR is
12% per year. Which of the three alternatives, if any, should be adopted? Assume repeatability is appropriate for this
comparison.
Caterpillar
Deere
Case
$22,000
$6,500
$4,500
$26,400
$10,000
$4,500
$16,000
$5,200
$3,750
Capital investment
Net annual revenue
Salvage value
Useful life
4 years
3 years
5 years
Transcribed Image Text:Three mutually exclusive earth-moving pieces of equipment are being considered for several large building projects in India over the next five years. The estimated cash flows for each alternative are given below. The construction company's MARR is 12% per year. Which of the three alternatives, if any, should be adopted? Assume repeatability is appropriate for this comparison. Caterpillar Deere Case $22,000 $6,500 $4,500 $26,400 $10,000 $4,500 $16,000 $5,200 $3,750 Capital investment Net annual revenue Salvage value Useful life 4 years 3 years 5 years
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