We plan to compare economically two design altérnatives (A añd B) Tor a heW Plde (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. Based on an after-tax MARR of 10% and using a future worth analysis, which alternative, is the economic choice?
We plan to compare economically two design altérnatives (A añd B) Tor a heW Plde (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. Based on an after-tax MARR of 10% and using a future worth analysis, which alternative, is the economic choice?
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter17: Long-term Investment Analysis
Section: Chapter Questions
Problem 3E
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