Question: Tesla is considering two robotic welding systems (mutually exclusive alternatives). MARR is 25% Alternative RoboONE WeldMe Initial investment . -1,500,000 . -2,200,000 Annual net revenue

Tesla is considering two robotic welding systems (mutually exclusive alternatives). MARR is 25%

Alternative RoboONE WeldMe

Initial investment . -1,500,000 . -2,200,000

Annual net revenue . 750,000 . 960,000

market value(at end of life) 710,000 . 925,000

life(years) . 3 4

a. assuming repeatability, which is preferred

b. SUppose the study period is 3 years. What is the imputed market value at the end of year 3 for WeldMe?

c. Assuming the answer to b is 1,400,000, which alternative is preferred in a three year study?

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