Question: KLS Excavating needs a new crane. It has received two proposals from suppliers. Proposal A costs $900,000 and generates cost savings of $325,000 per year

KLS Excavating needs a new crane. It has received two proposals from suppliers. Proposal A costs $900,000 and generates cost savings of $325,000 per year for three years, followed by savings of $200,000 for an additional two years. Proposal B costs $1,500,000 and generates cost savings of $400,000 for five years. If KLS has a discount rate of 12% and prefers using the IRR criterion to make investment decisions, which proposal should it accept?

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