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 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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