Question: Two mutually exclusive alternatives are being considered for the environmental protection equipment at a petroleum refinery. One of these alternatives must be selected. The

Two mutually exclusive alternatives are being considered for the environmental protection equipment

Two mutually exclusive alternatives are being considered for the environmental protection equipment at a petroleum refinery. One of these alternatives must be selected. The firm's MARR is 20% per year. The estimated cash flows for each alternative are as follows: Capital investment Annual Useful Market value(at end of useful expenses life(years) life) Alternative A $20,000 4,000 5 $4,000 Alternative B $30,000 2,000 10 $6,000 Assume the study period is shortened to five years. The market value of alternative B after five years is estimated to be $12,000. Which alternative would you select using NPW-C? (Draw the cash flow diagram and solve.)

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