Consider the following alternatives: Alternative 1 Alternative 3 Alternative 2 First cost ($) 170,000 120,000 100,000...

 

Transcribed Image Text:

Consider the following alternatives: Alternative 1 Alternative 3 Alternative 2 First cost ($) 170,000 120,000 100,000 Net cash flow per year ($/year) 34,500 24,000 15,000 Salvage value ($) 0 0 0 Useful life (years) 10 10 10 Assume that the interest rate (M.A.R.R.) is 12%. 1- Which alternative should be selected as the base one? 2- Determine which alternative should be selected by using incremental ERR. Consider the following alternatives: Alternative 1 Alternative 3 Alternative 2 First cost ($) 170,000 120,000 100,000 Net cash flow per year ($/year) 34,500 24,000 15,000 Salvage value ($) 0 0 0 Useful life (years) 10 10 10 Assume that the interest rate (M.A.R.R.) is 12%. 1- Which alternative should be selected as the base one? 2- Determine which alternative should be selected by using incremental ERR.

Answer rating: 100% (QA)

1 To determine which alternative should be selected as the base one we can use the Present Worth PW ... View the full answer