Question: Two mutually exclusive alternatives are being considered. The MARR is 15% per year. General inflation is 5.5%/year. Based on the data below, perform an appropriate

Two mutually exclusive alternatives are being considered. The MARR is 15% per year. General inflation is 5.5%/year. Based on the data below, perform an appropriate analysis to select the most economical alternative. State your assumptions.

Parameter Alternative A Alternative B
Initial Investment $ 150,000 $ 240,000
Annual revenue (actual $) $ 39,000 $ 50,000
Annual Cost (actual $) $5000 in year 1 increasing by $500 each year for remaining years $ 6,000
Market value at end of useful life (year 0$) $ 25,000 $ 40,000
Useful life, years 6 8

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