we compared economically two design alternatives (A and B) for a new ride (the Scream Machine) at a theme park. Alternative A required a $300,000 investment, produced after-tax net annual revenue of $55,000, and had a negligible salvage value at the end of the 10-year planning horizon. Alternative B required a $450,000 investment, generated after-tax net annual revenue of $80,000, and also had a negligible salvage value at the end of the 10-year planning horizon. The do-nothing alternative is feasible. Based on an after-tax MARR of 10% and using a future worth analysis, which alternative, if any, is the economic choice? (The do-nothing alternative is assumed to have a future worth of $0.)
we compared economically two design alternatives (A and B) for a new ride (the Scream Machine) at a theme park. Alternative A required a $300,000 investment, produced after-tax net annual revenue of $55,000, and had a negligible salvage value at the end of the 10-year planning horizon. Alternative B required a $450,000 investment, generated after-tax net annual revenue of $80,000, and also had a negligible salvage value at the end of the 10-year planning horizon. The do-nothing alternative is feasible. Based on an after-tax MARR of 10% and using a future worth analysis, which alternative, if any, is the economic choice? (The do-nothing alternative is assumed to have a future worth of $0.)
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