Management is considering three alternatives to satisfy an urgent need. Each of the alternatives will completely satisfy the need, so no combinations have to be considered. The first costs, operating costs, and salvage values over a 5-year planning horizon are shown below. Using a modified internal rate of return analysis with a MARR of 20 percent/year and a finance rate of 10 percent/year, determine the preferred alternative.

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End of Year Alternative 1 Alternative 2 Alternative 3 0 -$15,000 -$19,000 -$24,000 $6,500 $7,600 $4,000 2 $6,500 $7,600 $6,000 3 $6,500 $7,600 $10,000 4 $6,500 $7,600 $15,000 5 $6,500+ $0 $5,600 + $2,000 $15,000+ $3,000