Question 1: Two mutually exclusive alternatives are being considered. Both have lives of 10 years. Alternative A has a first cost of $10,000 and annual benefits of $4500. Alternative B costs $25,000 and has annual benefits of $8800. If the minimum attractive rate of return is 6%, which alternative should be selected? Solve the problem by

(a)Present worth analysis (b)Annual cash flow analysis (c)Rate of return analysis

Question 2: Installing an automated production system costing $300,000 is initially expected to save Zia Corporation $52,000 in expenses annually. If the system needs $7500 in operating and maintenance costs each year and has a salvage value of $30,000 at Year 10, what is the IRR of this system? If the company wants to earn at least 12% on all investments, should this system be purchased?