DO NOT USE EXCEL

Use Incremental IRR Analysis with MARR as your decision point

06.01-PR039 WP Dark Skies Observatory is considering several options to purchase a new deep space telescope. Revenue would be generated from the telescope by selling time and use" slots to various researchers around the world. Four possible telescopes have been identified in addition to the possibility of not buying a telescope if none are financially attractive. The table below details the characteristics of each telescope. An internal rate of return analysis is to be performed. T1 T3 T4 Useful life 10 years 10 years 10 years 10 years First cost $600,000 $800,000 $470,000 $540,000 Salvage value $70,000 $130,000 $65,000 $200,000 Annual revenue $400,000 $600,000 $260,000 $320,000 Annual expenses $130,000 $270,000 $70,000 $120,000 T2 a. Determine the preferred telescope if MARR is 25%/yr