The Ford Motor Company is considering three mutually exclusive electronic stability control systems for protection against rollover of its automobiles. The investment (study) period is four years, and MARR is 12% per year. Data for the fixture costs of the systems are as follows.

Plot the AW of each alternative against MARR as the MARR varies across this range: 4%, 8%, 12%, 16%, and 20%. What can you generalize about the range of the MARR for which each alternative is preferred?

Transcribed Image Text:

Alternatives A Capital investment $12,000 $15,800 $8,000 $4,000 $3,000 Annual savings MV (after 4 years) $5,200 $3,000 $3,500 $1,500 IRR 23% 19.2% 18%