Mr. "X", a friend of yours, is asked to invest in either of the following two mutually exclusive projects. His MARR is 10%. a. A car repair system is offered with an initial cost of $30,000 and a net annual income of $15,000. The system will have a salvage value of $9,000 at the end of its three-year life. b. A car cleaning operation is offered with $40,000 initial cost, net annual income of $20,000 for the first three years, and $5,000 for the last three years of its life. Its salvage value at the end of its six-year life is $6,500. What do you recommend he should do?

Answer rating: 100% (QA)

Accounting Rate of Return for the first project Average profi... View the full answer