Question: Consider the two mutually exclusive projects in Table P49. Salvage values represent the net proceeds (after tax) from disposal of the assets if they are

 Consider the two mutually exclusive projects in Table P49. Salvage values

Consider the two mutually exclusive projects in Table P49. Salvage values represent the net proceeds (after tax) from disposal of the assets if they are sold at the end of each year. Both projects B1 and B2 will be available (or can be repeated) with the same costs and salvage values for an indefinite period. a) Assuming an infinite planning horizon, which project is a better choice at MARR=12% b) With a 10-year planning horizon, which project is a better choice at MARR=12%? TABLE P49 B2 Cash Salvage Cash Salvage Flow Value Flow B1 Value 0 -$20,000 -$17,000 1 -2,000 10,000 9,000 -2,500 -2,500 2 8,000 6,000 -2,000 -2,000 3 5,000 -2,500 3,000 4 -2,000 3,000 5 -2,000 2.000 1

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