Question: A firm is considering three mutually exclusive alternatives as part of a production improvement program. The alternatives are: A B C Installed cost $10,000 $15,000

A firm is considering three mutually exclusive alternatives as part of a production improvement program. The alternatives are:

A B C

Installed cost $10,000 $15,000 $20,000

Uniform annual $1,625 $1,530 $1,890

Benefit

Useful life, 10 20 20

in years

The salvage value at the end of the useful life of each alternative is zero. At the end of 10 years, Alternative A could be replaced with another A with identical cost and benefits. The maximum attractive rate of return is 6%. Which alternative should be selected?

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