Six alternatives are nominated for constructing a Mall. The alternatives' investment costs and salvage values are...

 

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Six alternatives are nominated for constructing a Mall. The alternatives' investment costs and salvage values are identical. A 10-year study period has been specified, and the MARR is 18% per year. Determine which alternative should be chosen based on the IRR criterion? Suppose we have calculated the IRR on A(C-B) as 12.5%, IRR on A(D-B) as 22%, IRR on 4(E-D) as 20%, and IRR on A(F-E) as 15%. B C D E F $100 $150 $250 $400 $500 $700 $37.5 $50 $925 $1125 $1425 25% 20% 23.1% 22.5% 20.4% IRR on total investment A Investment cost (thousands) Annual revenue - expenses (thousands) $15 15% Six alternatives are nominated for constructing a Mall. The alternatives' investment costs and salvage values are identical. A 10-year study period has been specified, and the MARR is 18% per year. Determine which alternative should be chosen based on the IRR criterion? Suppose we have calculated the IRR on A(C-B) as 12.5%, IRR on A(D-B) as 22%, IRR on 4(E-D) as 20%, and IRR on A(F-E) as 15%. B C D E F $100 $150 $250 $400 $500 $700 $37.5 $50 $925 $1125 $1425 25% 20% 23.1% 22.5% 20.4% IRR on total investment A Investment cost (thousands) Annual revenue - expenses (thousands) $15 15%

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SOLUTION To determine which alternative should be chosen based on the IRR ... View the full answer