A company would like to pick the best option out of the two described in the...

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A company would like to pick the best option out of the two described in the table below. The table shows the net cash flow for each year of the 10 year planning horizon. MARR is 12% EOY Option 0 Option 1 Option 2 Option 3 Option 4 0 0 -300 -400 -400 -600 1 0 80 95 90 140 2 0 80 95 90 140 3 0 80 95 90 140 4 0 80 95 90 140 5 0 80 95 90 140 6 0 80 95 90 140 7 0 80 95 90 140 8 0 80 95 90 140 9 0 80 95 90 140 10 130 145 140 240 a) Use the present worth method to identify the best option. b) Use the incremental IRR method to identify the best option. A company would like to pick the best option out of the two described in the table below. The table shows the net cash flow for each year of the 10 year planning horizon. MARR is 12% EOY Option 0 Option 1 Option 2 Option 3 Option 4 0 0 -300 -400 -400 -600 1 0 80 95 90 140 2 0 80 95 90 140 3 0 80 95 90 140 4 0 80 95 90 140 5 0 80 95 90 140 6 0 80 95 90 140 7 0 80 95 90 140 8 0 80 95 90 140 9 0 80 95 90 140 10 130 145 140 240 a) Use the present worth method to identify the best option. b) Use the incremental IRR method to identify the best option.

Answer rating: 100% (QA)

a Using the present worth method Option 0 PV 0 Option 1 PV 300 80PVIFA12 10 95PVIFA12 ... View the full answer