Question: 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

Two mutually exclusive alternatives are being considered. Both have lives of

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

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