Question: 5. (25 points) The following two alternatives are mutually exclusive. (a) Use rate of return analysis to decide which one will you select if your
5. (25 points) The following two alternatives are mutually exclusive. (a) Use rate of return analysis to decide which one will you select if your MARR is 14% per year? (b) Graph interest rate vs. present value for both option 1 and 2. (c) Discuss how your selection between option 1 and 2 will change when MARR is changed and at which interest rate the two options are the same economically. Alternative Initial Annual Salvage Life, Cost Benefit Value years Option 1 $42,000 $10,000 $4,000 4 Option 2 $45,000 $11,500 $4,200 6
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